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Starbucks reports $1.1b profits in 3Q F2021, revenues jumped nearly 78 percent to $7.5b

Amsric Starbucks

MILAN – Starbucks reported on Tuesday better than expected results for its 13-week fiscal third quarter ended June 27, 2021, as more customers returned to its stores thanks to the easing of Covid-19 restrictions and offices reopening. However, Starbucks shares fell 3% in the after-hours session after the company lowered its sales growth forecast for China, its second-largest market outside the U.S.

Global same-store sales rose 73% in the fiscal third quarter ended June 27 compared with the year-earlier period, outpacing projections. U.S. same-store sales also beat estimates, and even grew 10% from two years ago – prior to the pandemic – on strong cold-beverage sales.

“As the Great Human Reconnection continues to unfold, our partners are rising to the occasion, ready to meet our customers wherever they need us to be,” said Chief Executive Kevin Johnson in an earnings release.

“Given the strength of our diverse portfolio and the elevated Starbucks Experience, as evidenced in our Q3 record results, we are raising our full-year financial outlook and are confident in our ability to continue to execute our ‘Growth at Scale’ agenda to unlock the full potential of the Starbucks brand,” concluded Johnson.

The chain scored profits of $1.1 billion, compared with a loss of $678.4 million in the same period of 2020. Revenues jumped nearly 78 percent to $7.5 billion.

Starbucks lifted full-year forecasts on revenue and profits, although the updated outlook was mixed by region.

The Seattle-based coffee chain now sees comparable sales growing 18% to 20% in China, down from a previous range of 27% to 32%. Starbucks also trimmed its international outlook for the same measure.

Starbucks Corp. said higher labor and supply costs are likely to linger for months, adding that it is promoting higher-end beverages such as cold coffee and could lift prices in areas to help compensate.

The company didn’t explicitly comment on the recent spike in Arabica coffee prices brought on by a rare freeze in the key growing market of Brazil.

Starbucks: Q3 Fiscal 2021 Highlights

  • Global comparable store sales increased 73%, driven by a 75% increase in comparable transactions, partially offset by a 1% decrease in average ticket
    • Americas comparable store sales increased 84%, driven by an 82% increase in comparable transactions and a 1% increase in average ticket; U.S. comparable store sales increased 83%, driven by an 80% increase in comparable transactions and a 1% increase in average ticket
    • International comparable store sales increased 41%, driven by a 55% increase in comparable transactions, partially offset by a 9% decline in average ticket; China comparable store sales increased 19%, driven by a 30% increase in transactions, partially offset by a 9% decline in average ticket; International and China comparable store sales include adverse impacts of approximately 5% and 6%, respectively, from lapping prior-year value-added tax exemptions in China
  • The company opened 352 net new stores in the third quarter of fiscal 2021, yielding 3% year-over-year unit growth, ending the period with a record 33,295 stores globally, of which 51% and 49% were company-operated and licensed, respectively
    • Stores in the U.S. and China comprised 62% of the company’s global portfolio at the end of the third quarter of fiscal 2021, with 15,348 and 5,135 stores, respectively
  • Consolidated net revenues of $7.5 billion grew 78% compared to the prior year, mainly driven by a 73% increase in comparable store sales primarily from lapping the unfavorable impact of business disruption in the prior year due to the COVID-19 pandemic and strength in U.S. company-operated sales in the current year
  • GAAP operating margin of 19.9% increased from -16.7% in the prior year primarily driven by sales leverage from business recovery and the lapping of COVID-19 related costs in the prior year, as well as pricing in the Americas, partially offset by investments in wages and benefits for store partners; GAAP operating margin also benefited from higher restructuring activities in the prior year primarily associated with the Americas Trade Area Transformation
    • Non-GAAP operating margin of 20.5%, up from -12.6% in the prior year
  • GAAP earnings per share of $0.97, up from a loss of $0.58 in the prior year
    • Non-GAAP earnings per share of $1.01, up from a loss of $0.46 in the prior year
  • Starbucks® Rewards loyalty program 90-day active members in the U.S. increased to 24.2 million, up 48% year-over-year