Starbucks Reports Q1 Fiscal 2025 Results with $9.4 Billion in Revenues

Starbucks Corporation reported its financial results for the first quarter of fiscal 2025, revealing total net revenues of $9.4 billion, a slight decrease of 0.3% compared to $9.4 billion in the same quarter of the previous year. The decline was primarily attributed to a $56 million drop in revenue from licensed stores, which was partially offset by a $30 million increase in revenue from company-operated stores. The company operated 1,347 net new company-operated stores over the past year, contributing to a 7% increase in revenue from this segment.

The company's operating income fell to $1.1 billion, down 24.5% from $1.5 billion in the prior year, resulting in an operating margin of 11.9%, a contraction of 390 basis points. This decline was driven by increased store operating expenses, which rose to $4.2 billion, reflecting investments in the "Back to Starbucks" initiative, including higher wages and benefits for employees. Additionally, the company reported net earnings attributable to Starbucks of $780.8 million, down from $1.0 billion in the same quarter last year, leading to earnings per share of $0.69, compared to $0.90 in the prior year.

In terms of strategic developments, Starbucks completed the acquisition of 23.5 Degrees Topco Limited, a U.K. licensed business partner, which converted 113 licensed stores to company-operated stores. This acquisition is expected to enhance the customer experience and expand the company's portfolio of company-operated stores. The company also reported a 4% decline in global comparable store sales, driven by a decrease in transactions, particularly in the U.S. market, where comparable transactions fell by 8%.

Starbucks' operational metrics showed a total of 40,576 stores globally, a 5% increase from the previous year. The company reported a significant increase in cash and cash equivalents, totaling $3.7 billion as of December 29, 2024, compared to $3.3 billion at the end of the previous quarter. The company’s total liabilities increased to $39.4 billion, up from $38.8 billion, while shareholders' deficit slightly widened to $7.5 billion.

Looking ahead, Starbucks plans to continue implementing its "Back to Starbucks" strategy, focusing on disciplined investments to enhance customer experience and support its employees. The company aims to build momentum from its first-quarter results and is committed to improving its operational efficiencies and store performance throughout the fiscal year.