Top 5 Statements from the Starbucks Earnings Call

1. On Operating Margin:

"North America's operating margin was 22.2% in Q3, contracting 250 basis points from the prior year, primarily due to ongoing inflationary headwinds, labor investments, including enhanced store partner wages and new partner training support costs, partially offset by pricing. While we begin executing investments under the reinvention plan, we were also focused on taking disciplined actions to offset margin pressures. Such measures include targeted pricing actions, store throughput initiatives and prioritization of discretionary spend, enabling the segment to fund critical investments while delivering Q3 performance as planned." - Rachel Ruggeri, CFO

"Operating margin for the International segment was 12.4% in Q3, down 950 basis points from the prior year, mainly driven by the leverage related to COVID impacts in China, sustained inflationary headwinds, lapping higher prior year government subsidies as well as partner investments, partially offset by strong sales leverage across markets outside of China." - Rachel Ruggeri, CFO

2. Growth outside of China:

"Outside of China, the tremendous growth of our international markets across our global portfolio continued into Q3, growing at 50% and more than offsetting the revenue challenges we experienced in China when excluding the impact of foreign currency translation. Virtually all of our key markets and regions posted double-digit revenue growth, including our licensed markets. Most of these markets' revenues have reached or exceeded pre-COVID levels and have set new record highs in recent quarters, driven by strong innovation and expanded digital capabilities. Strong momentum, combined with the sizable opportunity afforded by new store formats, gives us great confidence in the long runway of growth ahead for our international markets." - Rachel Ruggeri, CFO

3. Same-store sales:

"North America delivered revenue of $6.1 billion in Q3, up 13% from the prior year and also an all-time record, primarily driven by a 9% increase in comparable store sales, including an 8% increase in average ticket as well as net new store growth over the past 12 months. Compelling growth in our U.S. licensed store business also contributed to the segment's strong revenue performance." - Rachel Ruggeri, CFO

"Our U.S. business posted 9% comparable store sales growth, driven by ticket, a remarkable feat considering we were lapping a record-breaking quarter from last year. Our average ticket reached an all-time high yet again with the year-over-year increase driven by strategic pricing actions and food attach." - Rachel Ruggeri, CFO

4. China Growth:

"Despite the COVID headwinds, we remain on track to operate 6,000 stores by the end of this year. We added 107 net new stores in Q3 with our new stores continuing to deliver great returns and profitability. The fact that we could still open more than one store per day in Q3 speak volume to our team's capabilities, our resilience and a strong operating muscle we have built. We remain highly confident in the resilience and dynamism of the Chinese consumer economy. China's coffee market is still in its very early stages, and we have a long runway for growth ahead.

Store development will continue to fuel the growth for Starbucks China, and we'll continue to expand our retail footprint in a strategic and disciplined way. We're going to continue to go wide, enter into more new cities. We're going to continue to go deep and filling with more innovative formats to deliver the perfect and most relevant Starbucks Experience for our customers." - Ching Ying Wong Chairman & CEO of Starbucks China

5. Customer Demand:

"Customer demand for specifically customized cold coffee beverages, a category Starbucks single-handedly created and is now expanding around the world, is so strong that cold beverages now account for roughly 75% of our total beverage sales in U.S. company-operated stores. Customers are increasingly customizing their cold beverages by adding modifiers that enable the creation of a virtually unlimited range of taste, flavor and color profiles and then sharing their unique cold beverage creations with the world through social media." - Howard Schultz, CEO

BONUS

Modernizing Stores:

"Job #1 is making sure our partners have smooth operating stores, and we know technology is at the core of that.

And then as we move forward and what we'll be sharing more on the 13th is as we look to modernize technology and really be the engine behind the reinvention plan here, we believe that the critical competitive advantage that we're going to be bringing is speed at scale through really repositioning our core technology foundations to be even more agile and more cost efficient." - Deb Hall Lefevre, CTO

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