Starbucks (SBUX) Q1 2025 earnings summary

Executive summary

• Q1 FY25 net revenues were $9.4 billion, flat year-over-year, as new store openings offset a 4% global comparable store sales decline and the company advanced its "Back to Starbucks" turnaround strategy.

• EPS was $0.69, down 23% year-over-year, reflecting increased investments in wages, benefits, and operational changes.

• Operating margin contracted to 11.9%, down 380–390 basis points year-over-year, due to deleverage and higher labor costs.

• Early signs of turnaround include improved customer and partner engagement, sequential comp improvement, and positive response to reduced discounting.

• Store count grew to over 40,500, with 377–1,347 net new stores opened in Q1 and the acquisition of 23.5 Degrees Topco Limited in the UK.

Financial highlights

• Revenue was flat year-over-year at $9.4B, with 7% net new company-operated store growth offset by a 4% global comp sales decline.

• U.S. ticket growth was 4%, driven by prior year pricing and fewer discounts, partially offset by mix shift and removal of non-dairy milk upcharge.

• Store operating expenses as a percentage of company-operated store revenue increased to 54.0% from 49.7% year-over-year.

• Net earnings attributable to Starbucks were $780.8 million, down from $1,024.4 million year-over-year.

• Cash and investments totaled $4.2 billion at quarter end.

Outlook and guidance

• Full-year guidance remains suspended; Q2 EPS expected to be lowest due to seasonality, restructuring, and investments, but anticipated to improve sequentially and year-over-year in the second half of FY25.

• Management reiterated commitment to the "Back to Starbucks" strategy, focusing on long-term growth and shareholder value through dividends.

• Sufficient liquidity is expected for at least the next 12 months, with $4.2 billion in cash and investments and $3.0 billion in available credit.

• Capital expenditures for FY2025 are expected to be consistent with FY2024.

• Coffee price impact minimal in Q1; Q2 EPS to be pressured by ~$0.01 from coffee costs.