Starbucks Corporation
SBUX · Nasdaq
Next quarter
Reports Nov 4, 2026.
Consensus is $0.71 EPS for Sep 2026 across 10 estimates, ranging $0.61 to $0.76.
SBUX Jun 2026
- 28.79%
- +1.64%
- $0.66
- $0.85
- —
- $9.32B
Reported results
- $9.32B
- $980.40M
- 10.52%
- $1.05B
- $0.91
Highlights
- Comparable sales: Global comparable store sales rose 7.9%, with transactions up 4.2% and average ticket up 3.5%; U.S. comps increased 7.9% and North America comps rose 8.1%.
- Earnings beat: Non-GAAP EPS was $0.85 versus $0.66 consensus, a 28.79% surprise, while GAAP EPS was $0.91 versus $0.49 a year ago.
- Margin expansion: Non-GAAP operating margin expanded 430 basis points year over year to 14.4%; GAAP margin rose 60 basis points to 10.5% despite $302.6 million of restructuring and impairment charges.
- North America: Segment revenue increased 7% to $7.4 billion, operating income rose 10% to $1.0 billion, and operating margin improved 30 basis points to 13.6%.
- China transition: The Boyu Capital transaction converted 7,991 company-operated China stores to licensed stores; International revenue fell 34% to $1.3 billion, while its margin expanded 550 basis points to 19.1%.
- Revenue mix: Consolidated revenue declined 1.4% to $9.32 billion, primarily because of the China transaction; Channel Development revenue grew 22% to $587.9 million and operating income rose 40% to $306.2 million.
- Raised outlook: Starbucks now expects fiscal 2026 non-GAAP EPS of $2.55-$2.65, non-GAAP operating margin above 11%, flat-to-slightly higher revenue, and global comparable sales growth nearing 6.0%.
- Capital allocation: The company received $2.54 billion of net China divestiture proceeds, repurchased approximately $1.3 billion of debt, and declared a quarterly dividend of $0.62 per share.
Analysis
Starbucks’ fiscal third quarter was a strong operating print beneath a complicated portfolio transition. Non-GAAP EPS of $0.85 exceeded the $0.66 consensus by 28.79% and rose 70% year over year, while GAAP EPS of $0.91 increased 86% from $0.49. Revenue of $9.32 billion declined 1.4% from $9.46 billion last year and was down from $9.53 billion in the prior quarter, but operating income rose 4.8% year over year to $980.4 million and 18.4% sequentially from $828.1 million. Net income of $1.05 billion more than doubled from $510.9 million in the second quarter, although the comparison benefited from a lower tax rate and a $536.3 million pre-tax gain on the China divestiture.
The core story was the continued recovery in customer demand under Back to Starbucks: global comps grew 7.9%, led by transaction growth, with U.S. comps up 7.9%. North America delivered the clearest evidence of sales leverage, while margin expansion was also helped by tariff refunds and lower inflation. China materially reduced reported revenue as stores moved to a licensed joint venture, but increased International margin and produced cash for debt reduction. Starbucks raised its full-year outlook, calling for at least 6.5% U.S. comp growth in the fourth quarter and non-GAAP EPS of $2.55-$2.65, despite continued restructuring investment.
Back to Starbucks demand
Customer traffic remained the quarter’s most important operating signal. Global comparable store sales rose 7.9%, the fourth consecutive quarter of comp growth, with transactions contributing 4.2% and average ticket 3.5%. U.S. comparable sales also increased 7.9%, driven by 4.2% transaction growth and a 3.6% ticket increase. Management attributed the U.S. performance to higher delivery sales, stronger food attachment and beverage modifications, alongside service and experience initiatives.
- North America: Revenue rose 7% to $7.4 billion and operating income increased 10% to $1.0 billion. The segment’s 13.6% operating margin was up 30 basis points year over year, despite labor investment and higher restructuring costs.
- Store footprint: Starbucks opened 175 net stores during the quarter, ending with 41,304 locations. North America ended with 18,371 stores, down 2% year over year, while International ended with 22,933 stores, up 3%.
China licensing transition
The completed Boyu Capital transaction reshaped the reported quarter. Boyu acquired a 60% stake in Starbucks’ China retail operations for an enterprise value of approximately $4 billion, while Starbucks retained 40% and continued to own and license the brand and intellectual property. The 7,991-store conversion to licensed operations reduced company-operated revenue by approximately $776 million in the quarter, but replaced much of that economics with product sales, royalties and equity-method income.
- Reported impact: International revenue fell 34% to $1.32 billion and operating income declined 7% to $252.8 million, but segment operating margin expanded to 19.1% from 13.6%.
- Ongoing economics: Starbucks recorded $52.5 million of revenue from the China joint venture in the quarter, including product sales and royalties, and recognized its share of joint-venture income through equity investees.
- Strategic rationale: The company expects the predominantly licensed model to lower consolidated revenue but improve margin and provide a path toward a larger China footprint, with a long-term aspiration of as many as 20,000 locations.
Margins and earnings quality
Underlying profitability improved sharply, although the quarter included several unusual items. Non-GAAP operating income increased 40.7% to $1.35 billion and margin expanded to 14.4% from 10.1%. Sales leverage, lower inflation and tariff refunds supported the improvement, while higher labor investment and product mix were offsets. Channel Development was an outsized contributor, with revenue up 22% to $587.9 million and operating margin expanding 700 basis points to 52.1%.
- GAAP bridge: GAAP operating income was $980.4 million, up 4.8% year over year, after $302.6 million of restructuring and impairment charges, $44.1 million of China transaction costs and $18.1 million of transformation costs.
- Tax and divestiture: The 26.4% GAAP effective tax rate compared with 31.8% last year, while the China divestiture generated a $536.3 million pre-tax gain. These items helped lift GAAP net income 87% to $1.05 billion.
- Tariff refunds: Starbucks received substantially all requested refunds for qualifying tariffs during the quarter; the refunds largely offset related tariffs incurred during the first three quarters of fiscal 2026.
Restructuring investment
The recovery is being pursued alongside a substantial restructuring program. Starbucks recorded $415.8 million of restructuring and impairment costs in the first nine months of fiscal 2026, including $299.9 million tied to the current-year plans. The third quarter charge was concentrated in impairments of Reserve and Roastery locations, store asset reductions and severance as the company simplifies its support and non-retail infrastructure.
- Store actions: Starbucks closed 20 stores in the quarter and 247 year to date under the fiscal 2025 restructuring plans.
- Remaining costs: The company expects approximately $120 million related to fiscal 2025 plans and $110 million related to fiscal 2026 plans during the remainder of fiscal 2026 and the first half of fiscal 2027.
- Timing: Starbucks expects both restructuring plans and remaining store closures to be substantially complete by the first half of fiscal 2027.
Raised fiscal outlook
Management raised fiscal 2026 guidance as the sales recovery became more durable and margin performance improved. The outlook assumes the China retail business remains in the joint-venture licensee structure during the second half of the year, so reported revenue growth is expected to remain muted even as comparable sales grow.
- Fourth quarter: U.S. comparable store sales are expected to increase at least 6.5%, supporting full-year U.S. comps slightly above 6.0% and global comps nearing 6.0%.
- Profitability: Full-year consolidated revenue is expected to be flat to slightly higher, non-GAAP operating margin above 11.0%, and non-GAAP EPS of $2.55-$2.65.
- Capital deployment: Starbucks used China proceeds to retire approximately $1.3 billion of senior notes. Cash and cash equivalents ended the quarter at $3.45 billion, while the board declared a $0.62 quarterly dividend.
