Starbucks reports q3 fiscal 2022 results
Seattle--(business wire)--starbucks corporation (nasdaq: sbux) today reported financial results for its 13-week fiscal third quarter ended july 3, 2022. gaap results in fiscal 2022 and fiscal 2021 include items that are excluded from non-gaap results. please refer to the reconciliation of gaap measures to non-gaap measures at the end of this release for more information. q3 fiscal 2022 highlights global comparable store sales increased 3%, driven by a 6% increase in average ticket, partially offset by a 3% decline in comparable transactions north america comparable store sales increased 9%, driven by an 8% increase in average ticket and a 1% increase in comparable transactions; u.s. comparable store sales increased 9%, primarily driven by an 8% increase in average ticket international comparable store sales decreased 18%, driven by a 15% decline in comparable transactions and a 4% decline in average ticket; china comparable store sales decreased 44%, driven by a 43% decline in comparable transactions and a 1% decline in average ticket north america comparable store sales increased 9%, driven by an 8% increase in average ticket and a 1% increase in comparable transactions; u.s. comparable store sales increased 9%, primarily driven by an 8% increase in average ticket international comparable store sales decreased 18%, driven by a 15% decline in comparable transactions and a 4% decline in average ticket; china comparable store sales decreased 44%, driven by a 43% decline in comparable transactions and a 1% decline in average ticket the company opened 318 net new stores in q3, ending the period with 34,948 stores globally: 51% company-operated and 49% licensed at the end of q3, stores in the u.s. and china comprised 61% of the company’s global portfolio, with 15,650 stores in the u.s and 5,761 stores in china at the end of q3, stores in the u.s. and china comprised 61% of the company’s global portfolio, with 15,650 stores in the u.s and 5,761 stores in china consolidated net revenues up 9% to a quarterly record $8.2 billion, including a 2% adverse impact from foreign currency translation gaap operating margin of 15.9% decreased 400 basis points from 19.9% in the prior year, primarily driven by inflationary pressures, investments in labor including enhanced store partner wages as well as sales deleverage related to covid-19 restrictions in china, partially offset by pricing in north america and leverage across markets outside of china non-gaap operating margin of 16.9% decreased from 20.4% in the prior year non-gaap operating margin of 16.9% decreased from 20.4% in the prior year gaap earnings per share of $0.79, down from $0.97 in the prior year non-gaap earnings per share of $0.84, down from $0.99 in the prior year non-gaap earnings per share of $0.84, down from $0.99 in the prior year starbucks® rewards loyalty program 90-day active members in the u.s. increased to 27.4 million, up 13% year-over-year “we have clear line-of-sight on what we need to do to reinvent the company, elevate our partner and customer experiences and drive accelerated, profitable growth all around the world,” said howard schultz, interim chief executive officer. “the q3 results we announced today demonstrate the early progress we have made in just four short months,” schultz added. “we delivered record-breaking revenue performance during the quarter from continued strength in customer demand globally, balanced with our ability to execute investments despite macroeconomic and operational headwinds. our commitment to deliver shareholder value has not wavered, and we are making the right decisions and investments today for the future of starbucks,” commented rachel ruggeri, chief financial officer. q3 north america segment results (1) quarter ended change (%) ($ in millions) jul 3, 2022 jun 27, 2021 change in comparable store sales (2) 9% 84% change in transactions 1% 82% change in ticket 8% 1% store count 17,050 16,752 2% revenues $6,058.4 $5,370.7 13% operating income $1,330.1 $1,304.3 2% operating margin 22.0% 24.3% (230) bps (1) north america store count, revenues, operating income and operating margin for the quarter ended june 27, 2021, have been restated to conform with current period presentation. (2) includes only starbucks® company-operated stores open 13 months or longer. comparable store sales exclude the effects of fluctuations in foreign currency exchange rates and siren retail stores. stores that are temporarily closed or operating at reduced hours due to the covid-19 pandemic remain in comparable store sales while stores identified for permanent closure have been removed. net revenues for the north america segment grew 13% over q3 fy21 to $6.1 billion in q3 fy22, primarily driven by a 9% increase in company-operated comparable store sales, driven by an 8% increase in average ticket and a 1% increase in transactions, net new store growth of 2% over the past 12 months and strength in our licensed store sales. operating income increased to $1,330.1 million in q3 fy22, up from $1,304.3 million in q3 fy21. operating margin of 22.0% contracted from 24.3% in the prior year, primarily driven by higher commodity and supply chain costs due to inflationary pressures, investments in labor including enhanced store partner wages as well as increased spend on partner training support costs. this contraction was partially offset by pricing. q3 international segment results (1) quarter ended change (%) ($ in millions) jul 3, 2022 jun 27, 2021 change in comparable store sales (2) (18)% 41% change in transactions (15)% 55% change in ticket (4)% (9)% store count 17,898 16,543 8% revenues $1,584.7 $1,688.0 (6)% operating income $135.3 $327.3 (59)% operating margin 8.5% 19.4% (1,090) bps (1) international store count, revenues, operating income and operating margin for the quarter ended june 27, 2021, have been restated to conform with current period presentation. (2) includes only starbucks® company-operated stores open 13 months or longer. comparable store sales exclude the effects of fluctuations in foreign currency exchange rates and siren retail stores. stores that are temporarily closed or operating at reduced hours due to the covid-19 pandemic remain in comparable store sales while stores identified for permanent closure have been removed. net revenues for the international segment declined 6% over q3 fy21 to $1.6 billion in q3 fy22, driven by an 18% decline in comparable store sales, primarily attributable to covid-19 related restrictions in china, as well as a 9% adverse impact from foreign currency translation. these decreases were partially offset by growth in our licensed store revenue including higher product sales, royalty revenues and the conversion of the korea market from a joint venture to a fully licensed market in q4 fy21, as well as 1,355 net new store openings, or 8% store growth, over the past 12 months. operating income decreased to $135.3 million in q3 fy22 compared to $327.3 million in q3 fy21. operating margin of 8.5% contracted from 19.4% in the prior year, primarily driven by sales deleverage related to covid-19 restrictions in china, higher commodity and supply chain costs due to inflationary pressures, lower government subsidies and investments in store partner wages, partially offset by sales leverage across markets outside of china. q3 channel development segment results quarter ended change (%) ($ in millions) jul 3, 2022 jun 27, 2021 revenues $479.7 $414.0 16% operating income $191.7 $216.0 (11)% operating margin 40.0% 52.2% (1,220) bps net revenues for the channel development segment grew 16% over q3 fy21 to $479.7 million in q3 fy22, driven by growth in the global coffee alliance and ready-to-drink business. operating income decreased to $191.7 million in q3 fy22 compared to $216.0 million in q3 fy21. operating margin of 40.0% contracted from 52.2% in the prior year, primarily due to lapping global coffee alliance transition related activities and a decline in our north american coffee partnership joint venture income, largely due to inflationary pressures as well as business mix shift. fiscal 2022 financial targets the company's guidance remains suspended for the balance of this fiscal year. its q3 fy22 earnings conference call will start today at 2:00 p.m. pacific time. these items can be accessed on the company's investor relations website during and after the call. the company uses its website as a tool to disclose important information about the company and comply with its disclosure obligations under regulation fair disclosure. company updates conference call starbucks will hold a conference call today at 2:00 p.m. pacific time, which will be hosted by howard schultz, interim ceo, and other members of starbucks executive leadership team. the call will be webcast and can be accessed at http://investor.starbucks.com. a replay of the webcast will be available until end of day friday, september 2, 2022. about starbucks since 1971, starbucks coffee company has been committed to ethically sourcing and roasting high-quality arabica coffee. today, with more than 34,000 stores worldwide, the company is the premier roaster and retailer of specialty coffee in the world. through our unwavering commitment to excellence and our guiding principles, we bring the unique starbucks experience to life for every customer through every cup. to share in the experience, please visit us in our stores or online at stories.starbucks.com or www.starbucks.com. forward-looking statements certain statements contained herein and in our investor conference call related to these results are “forward-looking” statements within the meaning of applicable securities laws and regulations. generally, these statements can be identified by the use of words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. these statements include statements relating to trends in or expectations relating to the effects of our existing and any future initiatives, strategies, investments and plans, including our reinvention plan, as well as trends in or expectations regarding our financial results and long-term growth model and drivers; our operations in the u.s. and china; our environmental, social and governance efforts; our partners; economic and consumer trends, including the impact of inflationary pressures; impact of foreign currency translation; pricing actions; the conversion of certain market operations to fully licensed models; our plans for streamlining our operations, including store openings, closures and changes in store formats and models; expanding our licensing to nestlÉ of our consumer packaged goods and foodservice businesses and its effects on our channel development segment results; tax rates; business opportunities and expansion; strategic acquisitions; our dividends programs; commodity costs and our mitigation strategies; our liquidity, cash flow from operations, investments, borrowing capacity and use of proceeds; continuing compliance with our covenants under our credit facilities and commercial paper program; repatriation of cash to the u.s.; the likelihood of the issuance of additional debt and the applicable interest rate; the continuing impact of the covid-19 pandemic on our financial results and future availability of governmental subsidies for covid-19 or other public health events; our ceo transition; our share repurchase program; our use of cash and cash requirements; the expected effects of new accounting pronouncements and the estimated impact of changes in u.s. tax law, including on tax rates, investments funded by these changes and potential outcomes; and effects of legal proceedings. such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. actual future results and trends may differ materially depending on a variety of factors, including, but not limited to: the continuing impact of covid-19 on our business; regulatory measures or voluntary actions that may be put in place to limit the spread of covid-19, including restrictions on business operations or social distancing requirements, and the duration and efficacy of such restrictions; the resurgence of covid-19 infections and the circulation of novel variants of covid-19; fluctuations in u.s. and international economies and currencies; our ability to preserve, grow and leverage our brands; the ability of our business partners and third-party providers to fulfill their responsibilities and commitments; potential negative effects of incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling; potential negative effects of material breaches of our information technology systems to the extent we experience a material breach; material failures of our information technology systems; costs associated with, and the successful execution of, the company’s initiatives and plans; new initiatives and plans or revisions to existing initiatives or plans; our ability to obtain financing on acceptable terms; the acceptance of the company’s products by our customers, evolving consumer preferences and tastes and changes in consumer spending behavior; partner investments, changes in the availability and cost of labor including any union organizing efforts and our responses to such efforts; failure to attract or retain key executive or employee talent or successfully transition executives; significant increased logistics costs; inflationary pressures; the impact of competition; inherent risks of operating a global business including any potential negative effects stemming from the russian invasion of ukraine; the prices and availability of coffee, dairy and other raw materials; the effect of legal proceedings; and the effects of changes in tax laws and related guidance and regulations that may be implemented and other risks detailed in our filings with the securities and exchange commission, including in the “risk factors” and “management's discussion and analysis of financial condition and results of operations” sections of the company’s most recently filed periodic reports on form 10-k and form 10-q and subsequent filings. a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. you should not place undue reliance on the forward-looking statements, which speak only as of the date of this release. we are under no obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. key metrics the company's financial results and long-term growth model will continue to be driven by new store openings, comparable store sales growth and operating margin management. we believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies. starbucks corporation consolidated statements of earnings (unaudited, in millions, except per share data) quarter ended quarter ended jul 3, 2022 jun 27, 2021 % change jul 3, 2022 jun 27, 2021 as a % of total net revenues net revenues: company-operated stores $ 6,675.5 $ 6,363.1 4.9 % 81.9 % 84.9 % licensed stores 956.8 680.2 40.7 11.7 9.1 other 517.8 453.2 14.3 6.4 6.0 total net revenues 8,150.1 7,496.5 8.7 100.0 100.0 product and distribution costs 2,613.6 2,206.0 18.5 32.1 29.4 store operating expenses 3,302.5 2,966.9 11.3 40.5 39.6 other operating expenses 135.1 71.4 89.2 1.7 1.0 depreciation and amortization expenses 356.8 354.3 0.7 4.4 4.7 general and administrative expenses 486.7 494.9 (1.7 ) 6.0 6.6 restructuring and impairments 14.0 19.8 (29.3 ) 0.2 0.3 total operating expenses 6,908.7 6,113.3 13.0 84.8 81.5 income from equity investees 54.1 105.5 (48.7 ) 0.7 1.4 operating income 1,295.5 1,488.7 (13.0 ) 15.9 19.9 interest income and other, net 19.8 36.0 (45.0 ) 0.2 0.5 interest expense (123.1 ) (113.4 ) 8.6 (1.5 ) (1.5 ) earnings before income taxes 1,192.2 1,411.3 (15.5 ) 14.6 18.8 income tax expense 278.5 257.1 8.3 3.4 3.4 net earnings including noncontrolling interests 913.7 1,154.2 (20.8 ) 11.2 15.4 net earnings attributable to noncontrolling interests 0.8 0.8 0.0 0.0 0.0 net earnings attributable to starbucks $ 912.9 $ 1,153.4 (20.9 ) 11.2 % 15.4 % net earnings per common share - diluted $ 0.79 $ 0.97 (18.6 )% weighted avg. shares outstanding - diluted 1,151.0 1,186.2 cash dividends declared per share $ 0.49 $ 0.45 supplemental ratios: store operating expenses as a % of company-operated store revenues 49.5 % 46.6 % effective tax rate including noncontrolling interests 23.4 % 18.2 % three quarters ended three quarters ended jul 3, 2022 jun 27, 2021 % change jul 3, 2022 jun 27, 2021 as a % of total net revenues net revenues: company-operated stores $ 19,674.7 $ 17,742.8 10.9 % 82.5 % 84.8 % licensed stores 2,657.0 1,889.0 40.7 11.1 9.0 other 1,504.4 1,282.1 17.3 6.3 6.1 total net revenues 23,836.1 20,913.9 14.0 100.0 100.0 product and distribution costs 7,606.4 6,247.5 21.8 31.9 29.9 store operating expenses 10,017.1 8,657.6 15.7 42.0 41.4 other operating expenses 338.4 250.8 34.9 1.4 1.2 depreciation and amortization expenses 1,090.5 1,087.0 0.3 4.6 5.2 general and administrative expenses 1,494.0 1,431.4 4.4 6.3 6.8 restructuring and impairments 10.9 115.0 (90.5 ) 0.0 0.5 total operating expenses 20,557.3 17,789.3 15.6 86.2 85.1 income from equity investees 143.5 265.3 (45.9 ) 0.6 1.3 operating income 3,422.3 3,389.9 1.0 14.4 16.2 interest income and other, net 66.0 68.6 (3.8 ) 0.3 0.3 interest expense (357.6 ) (349.2 ) 2.4 (1.5 ) (1.7 ) earnings before income taxes 3,130.7 3,109.3 0.7 13.1 14.9 income tax expense 725.9 673.6 7.8 3.0 3.2 net earnings including noncontrolling interests 2,404.8 2,435.7 (1.3 ) 10.1 11.6 net earnings attributable to noncontrolling interests 1.5 0.8 87.5 0.0 0.0 net earnings attributable to starbucks $ 2,403.3 $ 2,434.9 (1.3 ) 10.1 % 11.6 % net earnings per common share - diluted $ 2.07 $ 2.06 0.5 % weighted avg. shares outstanding - diluted 1,160.5 1,184.7 cash dividends declared per share $ 1.47 $ 1.80 supplemental ratios: store operating expenses as a % of company-operated store revenues 50.9 % 48.8 % effective tax rate including noncontrolling interests 23.2 % 21.7 % north america (1) jul 3, 2022 jun 27, 2021 % change jul 3, 2022 jun 27, 2021 as a % of north america total net revenues net revenues: company-operated stores $ 5,513.2 $ 4,929.8 11.8 % 91.0 % 91.8 % licensed stores 544.2 439.0 24.0 9.0 8.2 other 1.0 1.9 (47.4 ) 0.0 0.0 total net revenues 6,058.4 5,370.7 12.8 100.0 100.0 product and distribution costs 1,713.2 1,399.9 22.4 28.3 26.1 store operating expenses 2,670.0 2,346.8 13.8 44.1 43.7 other operating expenses 55.4 38.0 45.8 0.9 0.7 depreciation and amortization expenses 201.2 188.9 6.5 3.3 3.5 general and administrative expenses 76.5 73.0 4.8 1.3 1.4 restructuring and impairments 12.0 19.8 (39.4 ) 0.2 0.4 total operating expenses 4,728.3 4,066.4 16.3 78.0 75.7 operating income $ 1,330.1 $ 1,304.3 2.0 % 22.0 % 24.3 % supplemental ratio: store operating expenses as a % of company-operated store revenues 48.4 % 47.6 % three quarters ended net revenues: company-operated stores $ 15,663.6 $ 13,483.1 16.2 % 90.9 % 91.8 % licensed stores 1,567.1 1,195.6 31.1 9.1 8.1 other 5.7 6.2 (8.1 ) 0.0 0.0 total net revenues 17,236.4 14,684.9 17.4 100.0 100.0 product and distribution costs 4,906.5 3,873.4 26.7 28.5 26.4 store operating expenses 7,997.8 6,788.8 17.8 46.4 46.2 other operating expenses 150.7 118.7 27.0 0.9 0.8 depreciation and amortization expenses 603.2 563.9 7.0 3.5 3.8 general and administrative expenses 224.5 221.6 1.3 1.3 1.5 restructuring and impairments 8.9 115.0 (92.3 ) 0.1 0.8 total operating expenses 13,891.6 11,681.4 18.9 80.6 79.5 operating income $ 3,344.8 $ 3,003.5 11.4 % 19.4 % 20.5 % supplemental ratio: store operating expenses as a % of company-operated store revenues 51.1 % 50.4 % international (1) jul 3, 2022 jun 27, 2021 % change jul 3, 2022 jun 27, 2021 quarter ended as a % of international total net revenues net revenues: company-operated stores $ 1,162.3 $ 1,433.3 (18.9 )% 73.3 % 84.9 % licensed stores 412.6 241.2 71.1 26.0 14.3 other 9.8 13.5 (27.4 ) 0.6 0.8 total net revenues 1,584.7 1,688.0 (6.1 ) 100.0 100.0 product and distribution costs 550.3 518.0 6.2 34.7 30.7 store operating expenses 632.5 620.1 2.0 39.9 36.7 other operating expenses 60.2 40.0 50.5 3.8 2.4 depreciation and amortization expenses 125.0 129.7 (3.6 ) 7.9 7.7 general and administrative expenses 81.8 94.9 (13.8 ) 5.2 5.6 total operating expenses 1,449.8 1,402.7 3.4 91.5 83.1 income from equity investees 0.4 42.0 (99.0 ) 0.0 2.5 operating income $ 135.3 $ 327.3 (58.7 )% 8.5 % 19.4 % supplemental ratio: store operating expenses as a % of company-operated store revenues 54.4 % 43.3 % three quarters ended net revenues: company-operated stores $ 4,011.1 $ 4,259.7 (5.8 )% 77.7 % 85.1 % licensed stores 1,089.9 693.4 57.2 21.1 13.8 other 62.1 53.8 15.4 1.2 1.1 total net revenues 5,163.1 5,006.9 3.1 100.0 100.0 product and distribution costs 1,746.8 1,582.2 10.4 33.8 31.6 store operating expenses 2,019.3 1,868.8 8.1 39.1 37.3 other operating expenses 138.8 107.5 29.1 2.7 2.1 depreciation and amortization expenses 391.4 413.1 (5.3 ) 7.6 8.3 general and administrative expenses 252.7 262.0 (3.5 ) 4.9 5.2 total operating expenses 4,549.0 4,233.6 7.4 88.1 84.6 income from equity investees 1.6 95.0 (98.3 ) 0.0 1.9 operating income $ 615.7 $ 868.3 (29.1 )% 11.9 % 17.3 % supplemental ratio: store operating expenses as a % of company-operated store revenues 50.3 % 43.9 % channel development jul 3, 2022 jun 27, 2021 % change jul 3, 2022 jun 27, 2021 quarter ended as a % of channel development total net revenues net revenues $ 479.7 $ 414.0 15.9 % product and distribution costs 325.8 268.3 21.4 67.9 % 64.8 % other operating expenses 13.6 (9.9 ) nm 2.8 (2.4 ) depreciation and amortization expenses — 0.2 (100.0 ) — 0.0 general and administrative expenses 2.3 2.9 (20.7 ) 0.5 0.7 total operating expenses 341.7 261.5 30.7 71.2 63.2 income from equity investees 53.7 63.5 (15.4 ) 11.2 15.3 operating income $ 191.7 $ 216.0 (11.3 )% 40.0 % 52.2 % three quarters ended net revenues $ 1,359.9 $ 1,155.3 17.7 % product and distribution costs 885.2 733.8 20.6 65.1 % 63.5 % other operating expenses 35.7 14.2 151.4 2.6 1.2 depreciation and amortization expenses 0.1 0.9 (88.9 ) 0.0 0.1 general and administrative expenses 8.1 7.4 9.5 0.6 0.6 total operating expenses 929.1 756.3 22.8 68.3 65.5 income from equity investees 141.9 170.3 (16.7 ) 10.4 14.7 operating income $ 572.7 $ 569.3 0.6 % 42.1 % 49.3 % corporate and other (1) jul 3, 2022 jun 27, 2021 % change quarter ended net revenues $ 27.3 $ 23.8 14.7 % product and distribution costs 24.3 19.8 22.7 other operating expenses 5.9 3.3 78.8 depreciation and amortization expenses 30.6 35.5 (13.8 ) general and administrative expenses 326.1 324.1 0.6 restructuring and impairments 2.0 — nm total operating expenses 388.9 382.7 1.6 operating loss $ (361.6 ) $ (358.9 ) 0.8 % three quarters ended net revenues $ 76.7 $ 66.8 14.8 % product and distribution costs 67.9 58.1 16.9 other operating expenses 13.2 10.4 26.9 depreciation and amortization expenses 95.8 109.1 (12.2 ) general and administrative expenses 1,008.7 940.4 7.3 restructuring and impairments 2.0 — nm total operating expenses 1,187.6 1,118.0 6.2 operating loss $ (1,110.9 ) $ (1,051.2 ) 5.7 % corporate and other general and administrative expenses, total operating expenses and operating loss for the quarter and three quarters ended june 27, 2021, have been restated to conform with current period presentation. corporate and other primarily consists of our unallocated corporate operating expenses and evolution fresh. starbucks corporation consolidated balance sheets (unaudited, in millions, except per share data) jul 3, 2022 oct 3, 2021 assets current assets: cash and cash equivalents $ 3,177.5 $ 6,455.7 short-term investments 76.9 162.2 accounts receivable, net 1,146.1 940.0 inventories 2,132.9 1,603.9 prepaid expenses and other current assets 534.1 594.6 total current assets 7,067.5 9,756.4 long-term investments 292.5 281.7 equity investments 302.7 268.5 property, plant and equipment, net 6,408.2 6,369.5 operating lease, right-of-use asset 8,037.1 8,236.0 deferred income taxes, net 1,752.9 1,874.8 other long-term assets 640.7 578.5 other intangible assets 203.4 349.9 goodwill 3,451.2 3,677.3 total assets $ 28,156.2 $ 31,392.6 liabilities and shareholders' equity/(deficit) current liabilities: accounts payable $ 1,489.8 $ 1,211.6 accrued liabilities 2,068.9 2,321.2 accrued payroll and benefits 706.8 772.3 current portion of operating lease liability 1,214.8 1,251.3 stored value card liability and current portion of deferred revenue 1,723.0 1,596.1 short-term debt 200.0 — current portion of long-term debt 999.1 998.9 total current liabilities 8,402.4 8,151.4 long-term debt 13,930.8 13,616.9 operating lease liability 7,554.4 7,738.0 deferred revenue 6,333.1 6,463.0 other long-term liabilities 594.4 737.8 total liabilities 36,815.1 36,707.1 shareholders' deficit: common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,146.9 and 1,180.0 shares, respectively 1.1 1.2 additional paid-in capital 117.1 846.1 retained deficit (8,719.7 ) (6,315.7 ) accumulated other comprehensive income/(loss) (65.0 ) 147.2 total shareholders’ deficit (8,666.5 ) (5,321.2 ) noncontrolling interests 7.6 6.7 total deficit (8,658.9 ) (5,314.5 ) total liabilities and shareholders' equity/(deficit) $ 28,156.2 $ 31,392.6 starbucks corporation consolidated statements of cash flows (unaudited and in millions) three quarters ended jul 3, 2022 jun 27, 2021 operating activities: net earnings including noncontrolling interests $ 2,404.8 $ 2,435.7 adjustments to reconcile net earnings to net cash provided by operating activities: depreciation and amortization 1,169.0 1,146.2 deferred income taxes, net 35.0 (113.2 ) income earned from equity method investees (175.0 ) (238.3 ) distributions received from equity method investees 145.9 226.7 stock-based compensation 206.6 255.3 non-cash lease costs 1,090.4 931.7 loss on retirement and impairment of assets 89.6 204.7 other (44.7 ) (6.8 ) cash provided by/(used in) changes in operating assets and liabilities: accounts receivable (245.5 ) (13.1 ) inventories (557.3 ) 8.4 accounts payable 341.7 108.2 deferred revenue 32.7 52.4 operating lease liability (1,201.4 ) (1,029.8 ) other operating assets and liabilities 5.8 500.3 net cash provided by operating activities 3,297.6 4,468.4 investing activities: purchases of investments (117.3 ) (367.3 ) sales of investments 72.6 130.4 maturities and calls of investments 59.5 298.7 additions to property, plant and equipment (1,295.4 ) (985.7 ) other (95.7 ) (62.3 ) net cash used in investing activities (1,376.3 ) (986.2 ) financing activities: net proceeds/(payments) from issuance of commercial paper 200.0 (296.5 ) net proceeds from issuance of short-term debt 38.9 215.6 repayments of short-term debt (38.9 ) (346.2 ) proceeds from issuance of long-term debt 1,498.1 — repayments of long-term debt (1,000.0 ) (1,250.0 ) proceeds from issuance of common stock 75.5 191.6 cash dividends paid (1,701.1 ) (1,588.2 ) repurchase of common stock (4,013.0 ) — minimum tax withholdings on share-based awards (123.5 ) (94.2 ) other (9.2 ) — net cash used in financing activities (5,073.2 ) (3,167.9 ) effect of exchange rate changes on cash and cash equivalents (126.3 ) 87.9 net increase/(decrease) in cash and cash equivalents (3,278.2 ) 402.2 cash and cash equivalents: beginning of period 6,455.7 4,350.9 end of period $ 3,177.5 $ 4,753.1 supplemental disclosure of cash flow information: cash paid during the period for: interest, net of capitalized interest $ 344.9 $ 373.6 income taxes $ 911.2 $ 407.9 supplemental information the following supplemental information is provided for historical and comparative purposes. u.s. supplemental data quarter ended change (%) ($ in millions) jul 3, 2022 jun 27, 2021 revenues $5,622.9 $4,984.6 13% change in comparable store sales (1) 9% 83% change in transactions 0% 80% change in ticket 8% 1% store count 15,650 15,348 2% (1) includes only starbucks® company-operated stores open 13 months or longer. comparable store sales exclude siren retail stores. stores that are temporarily closed or operating at reduced hours due to the covid-19 pandemic remain in comparable store sales while stores identified for permanent closure have been removed. china supplemental data quarter ended change (%) ($ in millions) jul 3, 2022 jun 27, 2021 revenues $544.5 $905.2 (40)% change in comparable store sales (1) (44)% 19% change in transactions (43)% 30% change in ticket (1)% (9)% store count 5,761 5,135 12% includes only starbucks® company-operated stores open 13 months or longer. comparable store sales exclude the effects of fluctuations in foreign currency exchange rates, stores identified for permanent closure and siren retail stores. stores that are temporarily closed or operating at reduced hours due to the covid-19 pandemic remain in comparable store sales while stores identified for permanent closure have been removed. store data net stores opened/(closed) and transferred during the period quarter ended three quarters ended stores open as of jul 3, 2022 jun 27, 2021 jul 3, 2022 jun 27, 2021 jul 3, 2022 jun 27, 2021 north america: company-operated stores 96 40 189 (249 ) 10,050 9,860 licensed stores 28 11 35 61 7,000 6,892 total north america (1) 124 51 224 (188 ) 17,050 16,752 international: company-operated stores 130 177 445 485 7,717 7,013 licensed stores 64 124 446 338 10,181 9,530 total international (1) 194 301 891 823 17,898 16,543 total company 318 352 1,115 635 34,948 33,295 north america and international licensed and total stores as of june 27, 2021, have been recast as a result of our fiscal 2021 operating segment reporting structure realignment. non-gaap disclosure in addition to the gaap results provided in this release, the company provides certain non-gaap financial measures that are not in accordance with, or alternatives for, generally accepted accounting principles in the united states. our non-gaap financial measures of non-gaap general and administrative expenses (g&a), non-gaap operating income, non-gaap operating income growth, non-gaap operating margin, non-gaap effective tax rate and non-gaap earnings per share exclude the below-listed items and their related tax impacts, as they do not contribute to a meaningful evaluation of the company’s future operating performance or comparisons to the company's past operating performance. the gaap measures most directly comparable to non-gaap g&a, non-gaap operating income, non-gaap operating income growth, non-gaap operating margin, non-gaap effective tax rate and non-gaap earnings per share are general and administrative expenses, operating income, operating income growth, operating margin, effective tax rate and diluted net earnings per share, respectively. non-gaap exclusion rationale restructuring and impairment costs management excludes restructuring and impairment costs relating to the write-down of certain company-operated store and corporate assets. management excludes these items for reasons discussed above. these expenses are anticipated to be completed within a finite period of time. transaction and integration-related costs management excludes transaction and integration costs, primarily amortization, of the acquired intangible assets for reasons discussed above. additionally, the majority of these costs will be recognized over a finite period of time. nestlÉ transaction and integration-related costs management excludes the transaction and integration-related costs related to the global coffee alliance with nestlÉ (inclusive of incremental costs to grow and develop the alliance) for reasons discussed above. non-gaap g&a, non-gaap operating income, non-gaap operating income growth, non-gaap operating margin, non-gaap effective tax rate and non-gaap earnings per share may have limitations as analytical tools. these measures should not be considered in isolation or as a substitute for analysis of the company’s results as reported under gaap. other companies may calculate these non-gaap financial measures differently than the company does, limiting the usefulness of those measures for comparative purposes. certain non-gaap measures included in this report were not reconciled to the comparable gaap financial measures because the gaap measures are not accessible on a forward-looking basis. the company is unable to reconcile these forward-looking non-gaap financial measures to the most directly comparable gaap measures without unreasonable efforts because the company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact gaap measures for these periods but would not impact the non-gaap measures. such items may include acquisitions, divestitures, restructuring and other items. the unavailable information could have a significant impact on the company’s gaap financial results. starbucks corporation reconciliation of selected gaap measures to non-gaap measures (unaudited, in millions except per share data) quarter ended (1) consolidated jul 3, 2022 jun 28, 2021 (2) change operating income, as reported (gaap) $ 1,295.5 $ 1,488.7 (13.0 )% restructuring and impairment costs (3) 14.0 19.8 transaction and integration-related costs (4) 63.5 42.3 nestlÉ transaction and integration-related costs (5) — (22.8 ) non-gaap operating income $ 1,373.0 $ 1,528.0 (10.1 )% operating margin, as reported (gaap) 15.9 % 19.9 % (400) bps restructuring and impairment costs (3) 0.2 0.3 transaction and integration-related costs (4) 0.8 0.6 nestlÉ transaction and integration-related costs (5) — (0.3 ) non-gaap operating margin 16.9 % 20.4 % (350) bps diluted net earnings per share, as reported (gaap) $ 0.79 $ 0.97 (18.6 )% restructuring and impairment costs (3) 0.01 0.02 transaction and integration-related costs (4) 0.06 0.04 nestlÉ transaction and integration-related costs (5) — (0.02 ) income tax effect on non-gaap adjustments (6) (0.02 ) (0.02 ) non-gaap eps $ 0.84 $ 0.99 (15.2 )% certain numbers may not foot due to rounding convention. in the first quarter of fiscal 2022, the company changed its treatment of removing certain integration costs related to the acquisitions of starbucks japan and east china for its non-gaap financial measures. integration costs, primarily related to information technology investments and compensation-related programs, are deemed to be representative of ongoing operations. these integration costs will remain in our non-gaap measures; non-gaap measures for the quarter ended june 27, 2021 have been recast to reflect this change. represents costs associated with our restructuring efforts. includes amortization expense of acquired intangible assets associated with the acquisition of east china. the third quarter of fiscal 2022 also includes other expenses associated with our russia market exit. the third quarter of fiscal 2021 also includes amortization expense of acquired intangible assets associated with the acquisition of starbucks japan. represents costs associated with the global coffee alliance with nestlÉ and a change in estimate relating to a transaction cost accrual. adjustments were determined based on the nature of the underlying items and their relevant jurisdictional tax rates. q3 qtd fy22 non-gaap disclosure details (in millions and before income taxes) q3 qtd fy22 north america international channel development corporate and other consolidated statement of earnings line item restructuring and impairment costs transaction and integration-related costs nestlÉ transaction and integration- related costs transaction and integration-related costs total non-gaap adjustment other operating expenses $ — $ 20.0 $ — $ 2.1 $ — $ 22.1 depreciation and amortization expenses — 41.4 — — — 41.4 restructuring and impairments 12.0 — — — 2.0 14.0 total impact to operating income $ (12.0 ) $ (61.4 ) $ — $ (2.1 ) $ (2.0 ) $ (77.5 )
