Starbucks Corporation
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Item 1. Business
General
In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended September 28, 2025 (“fiscal 2025”), Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us,” or “our.”
Starbucks is the premier roaster, marketer, and retailer of specialty coffee in the world, operating in 89 markets. Formed in 1985, Starbucks Corporation’s common stock trades on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “SBUX.” We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea, and other beverages and a variety of high-quality food items through company-operated stores (“stores” or “coffeehouses”). We also sell a variety of coffee and tea products and license our trademarks through other channels, such as licensed stores as well as grocery and foodservice through our Global Coffee Alliance with Nestlé S.A. (“Nestlé”). In addition to our flagship Starbucks Coffee® brand, we sell goods and services under the following brands: Teavana®, Ethos®, and Starbucks Reserve®.
Our primary objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. We believe the continuous investments in our brand and operations will deliver long-term targeted revenue and income growth. This includes expansion of our global store base, adding stores in both existing, developed markets such as the U.S. and in higher growth markets, as well as optimizing the mix of company-operated and licensed stores around the world. In addition, by leveraging experiences gained through our stores and elsewhere, we continue to drive beverage, equipment, process, and technology innovation, including in our industry-leading digital platform. We strive to regularly offer consumers new, innovative coffee and other products in a variety of forms, across new categories and diverse channels.
In the fourth quarter of fiscal 2024, we announced our “Back to Starbucks” strategy, which was implemented with the goal to bring new and existing customers to our stores and business, and return to growth. The strategy includes supporting our green apron partners, enhancing the customer experience, reestablishing ourselves as the community coffeehouse, and strengthening the brand through product development, marketing, in-store and digital experience. This strategic reset provides us with the opportunity to assess the business and refocus our efforts, including capital allocation priorities, efficiency efforts, and store growth initiatives.
In the fourth quarter of fiscal 2025, we announced a restructuring plan involving the closure of coffeehouses, and the further transformation of our support organization, as part of the Company’s “Back to Starbucks” strategy. We assessed our existing store portfolio with respect to both whether coffeehouses had a viable path to offering the physical environment consistent with the brand and a clear path to financial performance and we closed, or plan to close, the coffeehouses that did not meet these criteria. Refer to Note 18, Restructuring, included in Item 8 of Part II of this 10-K, for further discussion.
Human Capital Management
We invest in the well-being – the mental, physical, and financial health – of every partner through our practices, policies, and benefits. This work is grounded in the belief that we are at our best when we create inclusive, supportive, and welcoming environments, where we uplift one another with dignity, respect, and kindness. We believe the strength of our workforce is one of the significant contributors to our success as a global brand that leads with purpose. Therefore, one of our core strategies is to invest in, and support, our partners to differentiate our brand, products, and services in the competitive specialty coffee market, including the following areas of focus:
Oversight and Management
We believe in creating an inclusive and equitable environment that represents a broad spectrum of backgrounds and cultures that is reflective of our customers, partners, and communities. Working under these principles, our Partner Resources Organization is tasked with managing employment-related matters, including recruiting and hiring, onboarding and training, compensation planning, performance management, and professional development. Our Board of Directors (the “Board”) and Board committees provide oversight on certain human capital matters. As noted in its charter, our Compensation and Management Development Committee is responsible for periodically reviewing Starbucks partner resource programs and initiatives, including healthcare and other benefits, as well as our management development and succession planning practices and strategies. Our Audit and Compliance Committee works closely with the Risk Steering Committee, led by Starbucks chief financial officer (“cfo”) and chief legal officer, to monitor and mitigate current and emerging labor and human capital management risks. The Board, through its committees, annually reviews and assesses the effectiveness of the Company’s
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environmental and social strategies, policies, practices, goals, programs, disclosure, and risks, including review of the Company’s annual global impact report.
These reports and recommendations to the Board and its committees are part of the broader framework that guides how Starbucks should attract, retain, and develop a skilled workforce that aligns with our values and strategies.
We regularly conduct anonymous surveys to seek feedback from our partners on a variety of topics, including confidence in company leadership, competitiveness of our compensation and benefits package, career growth opportunities, and recommendations on how we can remain an employer of choice. The results are shared with our partners and reviewed by senior leadership, who analyze areas of progress or deterioration and prioritize actions and activities in response to this feedback to drive meaningful improvements in partner engagement. Our management and cross-functional teams also work closely to evaluate human capital management issues such as partner retention, workplace safety, harassment, and bullying, as well as to implement measures to mitigate these issues.
Belonging at Starbucks
At Starbucks, we are committed to creating environments where everyone is welcome and belongs. In 2023, led by Starbucks partners, we reaffirmed this commitment by cementing “Belonging” as one of our company values.
We are dedicated to being an inclusive, accessible and diverse company, with a deep commitment to opportunity for every one of our partners by making Starbucks the best job in retail and a great place to build a career.
Starbucks programs and benefits are open to every partner and designed to strengthen a culture of inclusion that values diverse perspectives and experiences – from strong partner networks to a focus on hiring internally for 90% of retail leadership roles. Our hiring and recruiting practices are competitive, fair and inclusive. They help us hire the strongest candidate for every job, every time. We offer industry-leading benefits, competitive pay, and opportunities for learning and development. When our partners feel good about their future – at Starbucks or beyond – they take care of our customers. Investing in them and prioritizing their experience creates value for everyone.
Total Rewards
We have demonstrated a history of investing in our workforce by offering competitive salaries and wages by continuously assessing the current business environment and labor market. We have consistently made enhancements in wages in order to attract talent to support our growth strategy and to elevate the customer experience. To foster a stronger sense of ownership and align the interests of partners with shareholders, restricted stock units are provided to eligible non-executive partners under our broad-based stock incentive programs. Furthermore, we offer competitive pay and a collection of benefits that are best in class. Partners in the U.S., which is our largest and most mature market, can:
•Grow their careers with us. We established a goal to fill 90% of retail leadership roles internally, creating a way for our hourly partners to build a career at Starbucks.
•Get a college degree, on us. Through the Starbucks College Achievement Plan (SCAP), Starbucks covers 100% of tuition for a first-time online bachelor’s degree from Arizona State University for partners working an average of 20 hours or more each week.
•Grow their savings. In fiscal 2025, more than 230,000 partners received a Bean Stock grant giving them an ownership stake in Starbucks.
•Obtain comprehensive healthcare coverage. We offer industry-leading health and wellbeing benefits for partners working an average of 20 hours or more each week.
•Extend parental leave. Starbucks covers up to 18 weeks of fully paid leave for birth parents, and up to 12 weeks of fully paid leave for non-birth parents for partners working an average of 20 hours or more each week.
Outside of the U.S., we have provided other innovative benefits to help address market-specific needs, such as providing interest-free loans to our U.K. partners to help cover rental deposits, mental health services in Canada, and, in China, an extra 14th Month Pay initiative, giving retail partners an additional month’s salary as a bonus on top of the 13th month pay that is customary in China, as well as a monthly housing subsidy for full-time Starbucks baristas and shift supervisors, and comprehensive health insurance coverage for parents of partners.
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Role-based Support
To help our partners succeed in their roles, we emphasize ongoing training and development opportunities. These include, but are not limited to, role-based training for our retail hourly partners, safety and security protocols, updates on new products and service offerings, and deployment of technologies. We periodically address a wide variety of topics such as achievable goal setting, giving and receiving constructive feedback, and effective engagement with communities and customers through the rollout of the Green Apron Service Model, a new foundational operating model that establishes repeatable, consistent, and scalable standards, across U.S company-operated coffeehouses. It is designed to create deeper connections between partners and customers by enabling partners to deliver consistent, high-quality experiences with warmth and care. The model includes new routines and tools that give partners more time to focus on craft and connection, supported by technology that improves order flow and speed of service.
Pay Equity
To be an employer of choice and maintain the strength of our workforce, we consistently assess the current business environment and labor market to refine our compensation and benefits programs and other resources available to our partners.
Starbucks is committed to fair pay principles to ensure partners are paid appropriately and equitably for their roles and the work they do, regardless of race, gender, or other protected categories. Further, we have formulated pay-equity principles, which provide equal footing, transparency, and accountability as best practices that help address known, systemic barriers to global pay equity.
As of September 28, 2025, Starbucks employed approximately 381,000 people worldwide. In the U.S., Starbucks employed approximately 223,000 people, with approximately 214,000 in company-operated stores and the remainder in corporate support, store development, roasting, manufacturing, warehousing, and distribution operations. Approximately 158,000 employees were employed outside of the U.S., with approximately 153,000 in company-operated stores and the remainder in regional support operations. Partners in approximately 6% of Starbucks U.S. company-operated stores are represented by unions. We believe our efforts in managing our workforce have been effective, evidenced by low turnover, a strong culture, and active employee participation.
Information about our Executive Officers
| Name | Age | Position | ||||||||||
Brian Niccol | 51 | chairman and chief executive officer | ||||||||||
| Cathy R. Smith | 62 | executive vice president, chief financial officer | ||||||||||
Mike Grams | 55 | executive vice president, chief operating officer | ||||||||||
Brady Brewer | 52 | chief executive officer, Starbucks International | ||||||||||
Sara Kelly | 46 | executive vice president, chief partner officer | ||||||||||
Pilar Ramos | 53 | executive vice president, chief legal officer | ||||||||||
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Interim Report on Form 10-Q includes certain“forward-looking”statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and the potential future results of Starbucks Corporation (together with its subsidiaries) that are based on our current expectations, estimates, forecasts, and projections about, among other things, our business, our results of operations, the industry in which we operate, our economic and market outlook, and the beliefs and assumptions of our management. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “continues,” “expects,” “anticipates,” “forecasts,” “estimates,” “intends,” “plans,” “seeks,” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “would,” “may,” “aims,” “intends,” or “projects,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. Our forward-looking statements, and the risks and uncertainties related thereto, include, but are not limited to, those described under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed 10-K and 10-Q and in other reports we file with the U.S. Securities and Exchange Commission (“SEC”), as well as, among others:
• our ability to preserve, grow, and leverage our brands;
• the impact of our brand marketing, promotional, advertising, and pricing strategies, platforms, reformulations, innovations, or customer experience initiatives or investments;
• the costs and risks associated with, and the successful and timely execution and effects of, our existing and any future business opportunities, expansions, initiatives, strategies, investments, transformation efforts, and plans, including our “Back to Starbucks” strategy and our restructuring plans;
• the costs and risks associated with, and the successful execution and effects of, strategic changes to our ownership and operating structure, including as a result of acquisitions, divestitures, other strategic transactions or entry into joint ventures, including our joint venture with respect to Starbucks retail operations in China;
• our ability to align our investment efforts with our strategic goals;
• evolving consumer preferences, demand, consumption, or spending behavior, reduction in discretionary spending and price increases, and our ability to anticipate or react to these changes;
• the ability of our business partners, suppliers, and third-party providers to fulfill their responsibilities and commitments and our reliance on certain key business partners and suppliers;
• the potential negative effects of food or beverage safety incidents or product recalls, including any perceived association of our products or brands with such incidents;
• our ability to open new stores and efficiently maintain the attractiveness of our existing stores and manage related costs;
• our heavy reliance on the financial performance of our North America operating segment and our dependence on the performance and growth of certain international markets;
• our ability to operate and successfully expand our footprint in international markets, which is influenced by factors distinct from our North America operating segment;
• inherent risks of operating a global business, including changing conditions in our markets; local factors affecting store openings; protectionist trade or foreign investment policies, including trade restrictions, tariffs, quotas, import/export regulations, customs restrictions, sanctions, countersanctions, and retaliatory measures; compliance with local laws and other regulations; and local labor policies and conditions, including labor strikes and work stoppages;
• higher costs, lower quality, or unavailability of coffee, dairy, cocoa, energy, water, raw materials, packaging, or product ingredients and related volatility;
• the ability of our supply chain to meet current or future business needs and our ability to scale and improve our forecasting, planning, production, and logistics management;
• the potential impact on our supply chain and operations of adverse weather conditions, natural disasters, or significant increases in logistics costs;
• a worsening in the terms and conditions upon which we engage with our manufacturers and source suppliers;
• the impact of unfavorable macroeconomic conditions and other factors, including economic slowdowns or recessions, rising real estate costs, supply chain disruptions, climate change and extreme weather events, inflation and interest rate fluctuations, government shutdowns, labor unrest, geopolitical instability, disruptions in credit markets and foreign current exchange rate volatility;
• failure to meet market expectations for our financial performance or any announced guidance and the impact thereof;
• failure to attract or retain key executive or partner talent;
• changes in the availability and cost of labor, including any union organizing efforts and our responses to such efforts;
• the impact of, and our ability to respond to, substantial competition from new entrants, consolidations by competitors, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods); marketing; category expansion; product introductions; or entry or expansion in our geographic markets;
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• evolving corporate governance and public disclosure regulations and expectations, including with respect to sustainability matters;
• the potential impact of activist shareholder actions or tactics;
• failure to comply with applicable laws and complex and changing legal and regulatory requirements, including those governing privacy, data protection, artificial intelligence, and other emerging technologies;
• the impact or likelihood of significant legal disputes and proceedings or government investigations;
• the unauthorized access, use, theft, or destruction of our data, or of our proprietary or confidential information, including as a result of increasingly sophisticated threats enabled or accelerated by artificial intelligence, and the impact thereof;
• potential negative effects of, and our ability to respond to, a material failure, inadequacy, or interruption of our information technology systems or digital platforms, or those of our third-party business partners or service providers, or failure to comply with data protection laws; and
• our ability to adequately protect our intellectual property or adequately ensure that we are not infringing the intellectual property of others.
In addition, many of the foregoing risks and uncertainties are, or could be, exacerbated by any worsening of the global business and economic environment, and new risks periodically emerge. 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. Actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. We are under no obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise.
This information should be read in conjunction with the unaudited consolidated financial statements and the notes included in Item 1 of Part I of this 10-Q, as well as the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in the 10-K.
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Introduction and Overview
Starbucks is the premier roaster, marketer, and retailer of specialty coffee globally, with a presence in 90 markets worldwide. As of June 28, 2026, Starbucks had more than 41,000 company-operated and licensed stores, an increase of 1% from the prior year. Additionally, we sell a variety of consumer-packaged goods, primarily through the Global Coffee Alliance established with Nestlé and other partnerships and joint ventures.
We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America, and the Caribbean; and 3) Channel Development. Unallocated corporate expenses are reported within Corporate and Other.
We believe our financial results and long-term growth model will continue to be driven by new store openings, comparable store sales, and operating margin management, underpinned by disciplined capital allocation. The comparable store sales metric includes company-operated stores open 13 months or longer, and excludes the effects of foreign currency exchange rates. Stores that are temporarily closed for fewer than three weeks or operating at reduced hours remain in comparable store sales while permanent store closures are removed in the month following closure. We analyze comparable store sales on a constant currency basis as this helps identify underlying business trends without distortion from the effects of currency movements. Throughout this MD&A, we commonly discuss the following key operating metrics, which we believe 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:
•New store openings and store count
•Comparable store sales
•Operating margin
Our fiscal year ends on the Sunday closest to September 30. Fiscal 2026 and 2025 include 52 weeks. All references to store counts, including data for new store openings, are reported net of store closures, unless otherwise noted.
Starbucks results for the third quarter of fiscal 2026 showed continued progress and momentum on key “Back to Starbucks” initiatives, as demonstrated through continued global comparable store sales growth, consolidated operating margin expansion, and improved customer engagement. These initiatives included the Green Apron Service standard to improve operational consistency and the coffeehouse experience, engaging consumer marketing, disciplined menu innovation, a redesigned Starbucks Rewards program, and coffeehouse uplifts, all of which are intended to deliver greater connection, consistency, and value for customers. During the third quarter of fiscal 2026, consolidated net revenues decreased 1% to $9.3 billion compared to $9.5 billion in the third quarter of fiscal 2025, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026. The decline in consolidated revenues was offset by a 7.9% increase in global comparable store sales, driven by a 7.9% increase in the U.S. market. Also contributing to the offset was higher revenues from our international licensed store business. Specific to the U.S. market, the increase in comparable store sales was driven by a 4.2% increase in comparable transactions and a 3.6% increase in average ticket, primarily driven by higher delivery sales and strength in customer food attach and beverage modifications. Consolidated operating margin expanded 60 basis points from the prior year to 10.5%, primarily driven by sales leverage and lower inflation paired with tariff refunds, offset by higher restructuring costs and labor investments largely in support of “Back to Starbucks.”
Divestiture of Starbucks Retail Operations in China
In the first quarter of fiscal 2026, we announced that the Company entered into an agreement to form a joint venture with Boyu Capital to operate Starbucks retail in China (the “disposal group”), marking a significant milestone in the Company’s long-term strategy to unlock sustainable, disciplined growth in one of the Company’s critical growth markets.
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In the third quarter of fiscal 2026, the transaction closed, and under the terms of the agreement, funds managed by Boyu Capital acquired a 60% stake in Starbucks China retail operations, while Starbucks retained a 40% ownership interest and continues to own and license the brand and intellectual property to the joint venture. The disposal group was deconsolidated from our financial statements and we transitioned from recording revenues and expenses of the disposal group to recording our share of income from the joint venture, recognized as income from equity investees under the equity method of accounting. We expect that the conversion to our licensed joint venture model will continue to drive lower revenues and higher operating margin for Starbucks, as compared to the historical, company-operated model.
We used a portion of our transaction proceeds for debt reduction, strengthening our balance sheet and allowing us to execute our long-term growth strategy with greater financial flexibility. The joint venture is expected to reinvigorate sustainable growth in China through a focus on expansion, innovation and elevated customer experiences, with a shared long-term aspiration to grow to as many as 20,000 locations in China over time. By bringing together the trusted Starbucks brand, and Boyu Capital’s deep local expertise, we believe we will be able to serve more customers, enter more cities, strengthen profitability, and better compete in China’s dynamic and evolving market.
Restructuring
In support of our “Back to Starbucks” strategy, as part of the restructuring plan announced in the fourth quarter of fiscal 2025, we closed stores that did not demonstrate a viable path to profitability or meet our standards of delivering a warm, welcoming space for our customers and partners. Those store closures in North America were substantially completed in fiscal 2025, and the majority of those International store closures were completed in the first quarter of fiscal 2026.
In the second quarter of fiscal 2026, management approved a restructuring plan to relocate certain functions of our support organization to an additional office in Nashville, Tennessee, further supporting the Company’s “Back to Starbucks” strategy and the intention to establish a more strategic presence in the Southeast region of the United States. Our new office in Nashville reflects three key advantages: proximity to key suppliers, access to a deep and growing talent pool in the region, notably in technology, and alignment with where we expect future coffeehouse growth.
In the third quarter of fiscal 2026, we announced an additional fiscal 2026 restructuring plan focused on further transformation of our global support organization and non-retail facilities, as well as reducing the future operational complexity of our Starbucks Reserve and Roastery locations resulting in a reassessment and impairment of the associated asset group. Under the plan, the Company expects to capture cost savings through a more streamlined support structure, and a simplified operating model for Starbucks Reserve and Roastery locations.
Strategic Initiatives
As the fiscal year progresses, we will continue to refine and execute our “Back to Starbucks” initiatives to drive topline momentum and build sales leverage while investing in our cafes and customer experience, with a focus on delivering exceptional service with speed, providing seamless digital experiences, strengthening our supply chain, and enabling technological efficiencies. We will continue to amplify our brand, engaging with our customers authentically and distinctly as Starbucks, through broad-based marketing, menu innovation, and Starbucks Rewards engagement, with the goal of deepening customer connection, brand loyalty and affinity.
As our international business shifts toward a more predominantly licensed model, we will continue evolving how we support our licensed business partners. We expect our international business to be a meaningful contributor to coffeehouse growth over time, supported by our licensed business model and significant opportunities for development in markets globally. We will apply continued discipline to how we grow our global footprint, with a focus on ensuring new coffeehouses meet our expectations for returns and long-term growth.
We expect certain macroeconomic pressures to continue easing into the fourth quarter, including impacts on product and distribution costs from tariffs and elevated coffee pricing. While we believe we are making the right strategic investments to improve our operating foundations, our focus going forward will be on driving consistency at scale while balancing and maintaining a healthier cost structure. We will continue to test, learn, and refine our approach to deliver the best of Starbucks to drive durable, profitable, long-term growth.
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Results of Operations (in millions)
Revenues
| Quarter Ended | Three Quarters Ended | |||||||||||||||||||||||||||||||||||||||||||||
| Jun 28, 2026 | Jun 29, 2025 | $ Change | % Change | Jun 28, 2026 | Jun 29, 2025 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||
| Company-operated stores | $ | 7,506.1 | $ | 7,812.5 | $ | (306.4) | (3.9) | % | $ | 23,510.6 | $ | 22,882.9 | $ | 627.7 | 2.7 | % | ||||||||||||||||||||||||||||||
| Licensed stores | 1,200.8 | 1,105.6 | 95.2 | 8.6 | 3,419.6 | 3,257.3 | 162.3 | 5.0 | ||||||||||||||||||||||||||||||||||||||
| Other | 615.8 | 537.9 | 77.9 | 14.5 | 1,839.1 | 1,475.2 | 363.9 | 24.7 | ||||||||||||||||||||||||||||||||||||||
| Total net revenues | $ | 9,322.7 | $ | 9,456.0 | $ | (133.3) | (1.4) | % | $ | 28,769.3 | $ | 27,615.4 | $ | 1,153.9 | 4.2 | % | ||||||||||||||||||||||||||||||
For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025
Total net revenues for the third quarter of fiscal 2026 decreased $133 million, primarily due to lower revenues from company-operated stores ($306 million) partially offset by higher licensed stores ($95 million) and other revenues ($78 million).
Company-operated stores revenue decreased $306 million, primarily driven by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($776 million) and unfavorable foreign currency impacts ($52 million). This was partially offset by a 7.9% increase in comparable store sales ($524 million) attributable to a 4.2% increase in comparable transactions and a 3.5% increase in average ticket.
Licensed stores revenue increased $95 million, primarily driven by higher product sales to, and royalty revenues from, our existing licensees ($58 million) and our newly-formed China joint venture ($53 million) following the conversion of Starbucks retail operations in China to our licensed joint venture model, partially offset by lower equipment sales to licensees ($16 million).
Other revenues increased $78 million, primarily due to an increase in revenue in the Global Coffee Alliance ($89 million).
For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025
Total net revenues for the first three quarters of fiscal 2026 increased $1.2 billion, primarily due to higher revenues from company-operated stores ($628 million), other revenues ($364 million), and licensed stores ($162 million).
Company-operated stores revenue increased $628 million, primarily driven by a 5.9% increase in comparable store sales ($1.2 billion) attributable to a 3.6% increase in comparable transactions and a 2.3% increase in average ticket. This was partially offset by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($729 million).
Licensed stores revenue increased $162 million, primarily driven by higher product sales to, and royalty revenues from, our existing licensees in our International segment ($182 million) and our newly-formed China joint venture ($53 million) following the conversion of Starbucks retail operations in China to our licensed joint venture model. This was partially offset by lower equipment sales to our licensees globally ($52 million) and a decrease in product sales to, and royalty revenues from, our licensees in our North America segment ($21 million).
Other revenues increased $364 million, primarily due to an increase in revenue in the Global Coffee Alliance ($311 million).
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Operating Expenses
| Quarter Ended | Three Quarters Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 28, 2026 | Jun 29, 2025 | $ Change | Jun 28, 2026 | Jun 29, 2025 | Jun 28, 2026 | Jun 29, 2025 | $ Change | Jun 28, 2026 | Jun 29, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| As a % of Total Net Revenues | As a % of Total Net Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product and distribution costs | $ | 2,828.6 | $ | 2,955.5 | $ | (126.9) | 30.3 | % | 31.3 | % | $ | 9,310.7 | $ | 8,586.8 | $ | 723.9 | 32.4 | % | 31.1 | % | ||||||||||||||||||||||||||||||||||||||
| Store operating expenses | 4,197.4 | 4,344.8 | (147.4) | 45.0 | 45.9 | 13,158.3 | 12,723.9 | 434.4 | 45.7 | 46.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other operating expenses | 131.9 | 151.6 | (19.7) | 1.4 | 1.6 | 393.6 | 442.8 | (49.2) | 1.4 | 1.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization expenses | 361.6 | 427.6 | (66.0) | 3.9 | 4.5 | 1,125.8 | 1,254.0 | (128.2) | 3.9 | 4.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 598.8 | 677.2 | (78.4) | 6.4 | 7.2 | 1,855.7 | 1,975.2 | (119.5) | 6.5 | 7.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and impairments | 302.6 | 20.8 | 281.8 | 3.2 | 0.2 | 415.8 | 137.0 | 278.8 | 1.4 | 0.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total operating expenses | 8,420.9 | 8,577.5 | (156.6) | 90.3 | 90.7 | 26,259.9 | 25,119.7 | 1,140.2 | 91.3 | 91.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Income from equity investees | 78.6 | 57.1 | 21.5 | 0.8 | 0.6 | 189.9 | 162.7 | 27.2 | 0.7 | 0.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 980.4 | $ | 935.6 | $ | 44.8 | 10.5 | % | 9.9 | % | $ | 2,699.3 | $ | 2,658.4 | $ | 40.9 | 9.4 | % | 9.6 | % | ||||||||||||||||||||||||||||||||||||||
Store operating expenses as a % of company-operated stores revenue | 55.9 | % | 55.6 | % | 56.0 | % | 55.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025
Product and distribution costs as a percentage of total net revenues decreased 100 basis points for the third quarter of fiscal 2026, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 (approximately 130 basis points), lower inflation paired with tariff refunds (approximately 80 basis points), partially offset by mix shift (approximately 110 basis points).
Store operating expenses as a percentage of total net revenues decreased 90 basis points for the third quarter of fiscal 2026. Store operating expenses as a percentage of company-operated stores revenue increased 30 basis points, primarily due to labor investments largely in support of “Back to Starbucks” (approximately 190 basis points), and increased reserves for self-insured claims (approximately 100 basis points), partially offset by sales leverage (approximately 250 basis points).
Other operating expenses decreased $20 million, primarily due to savings from simplifying our licensed business support organization ($15 million).
Depreciation and amortization expenses as a percentage of total net revenues decreased 60 basis points, primarily driven by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
General and administrative expenses decreased $78 million, primarily due to lapping of the Leadership Experience 2025 ($81 million), restructuring-related savings ($63 million), and the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($42 million). This was partially offset by increases in performance-based compensation ($79 million) and transaction-related expenses related to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($44 million).
Restructuring and impairments increased $282 million, largely due to costs associated with the impairment of Starbucks Reserve and Roastery store locations, and partner severance costs. See Note 17, Restructuring and Impairments, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for further discussion.
Income from equity investees increased $22 million, primarily due to income from our China joint venture, which was formed upon the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
41
The combination of these changes resulted in an overall increase in operating margin of 60 basis points for the third quarter of fiscal 2026.
For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025
Product and distribution costs as a percentage of total net revenues increased 130 basis points for the first three quarters of fiscal 2026 largely due to mix shift (80 basis points).
Store operating expenses as a percentage of total net revenues decreased 40 basis points for the first three quarters of fiscal 2026. Store operating expenses as a percentage of company-operated stores revenue increased 40 basis points, primarily due to labor investments largely in support of “Back to Starbucks” (approximately 220 basis points), and increased reserves for self- insured claims (approximately 60 basis points), offset by sales leverage (approximately 300 basis points).
Other operating expenses decreased $49 million, primarily due to savings from simplifying our licensed business support organization ($45 million).
Depreciation and amortization expenses as a percentage of total net revenues decreased 60 basis points, primarily driven by ceasing depreciation upon classifying our Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 and converting Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
General and administrative expenses decreased $120 million, largely due to restructuring-related savings ($174 million) and lapping of the Leadership Experience 2025 ($81 million) and the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($42 million). This was partially offset by increases in performance-based compensation ($112 million) and transaction-related expenses related to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($74 million).
Restructuring and impairments increased $279 million, largely due to costs associated with the impairment of Starbucks Reserve and Roastery store locations, and partner severance costs. See Note 17, Restructuring and Impairments, to the consolidated financial statements included in Item 1 of Part I of this 10-Q, for further discussion.
Income from equity investees increased $27 million, primarily due to income from our China joint venture, which was formed upon the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
The combination of these changes resulted in an overall decrease in operating margin of 20 basis points for the first three quarters of fiscal 2026.
42
Other Income and Expenses
| Quarter Ended | Three Quarters Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Jun 28, 2026 | Jun 29, 2025 | $ Change | Jun 28, 2026 | Jun 29, 2025 | Jun 28, 2026 | Jun 29, 2025 | $ Change | Jun 28, 2026 | Jun 29, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
| As a % of Total Net Revenues | As a % of Total Net Revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating income | $ | 980.4 | $ | 935.6 | $ | 44.8 | 10.5 | % | 9.9 | % | $ | 2,699.3 | $ | 2,658.4 | $ | 40.9 | 9.4 | % | 9.6 | % | ||||||||||||||||||||||||||||||||||||||
| Net gain resulting from divestiture of certain operations | 536.3 | — | 536.3 | 5.8 | — | 536.3 | 0.0 | 536.3 | 1.9 | 0.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income and other, net | 37.2 | 25.6 | 11.6 | 0.4 | 0.3 | 87.3 | 81.8 | 5.5 | 0.3 | 0.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | (134.6) | (142.3) | 7.7 | (1.4) | (1.5) | (410.6) | (396.8) | (13.8) | (1.4) | (1.4) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings before income taxes | 1,419.3 | 818.9 | 600.4 | 15.2 | 8.7 | 2,912.3 | 2,343.4 | 568.9 | 10.1 | 8.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Income tax expense | 374.4 | 260.4 | 114.0 | 4.0 | % | 2.8 | 1,063.3 | 619.9 | 443.4 | 3.7 | % | 2.2 | ||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings including noncontrolling interests | 1,044.9 | 558.5 | 486.4 | 11.2 | 5.9 | 1,849.0 | 1,723.5 | 125.5 | 6.4 | 6.2 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings/(loss) attributable to noncontrolling interests | (0.4) | 0.2 | (0.6) | 0.0 | 0.0 | (0.6) | 0.3 | (0.9) | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to Starbucks | $ | 1,045.3 | $ | 558.3 | $ | 487.0 | 11.2 | % | 5.9 | % | $ | 1,849.6 | $ | 1,723.2 | $ | 126.4 | 6.4 | % | 6.2 | % | ||||||||||||||||||||||||||||||||||||||
| Effective tax rate including noncontrolling interests | 26.4 | % | 31.8 | % | 36.5 | % | 26.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025
Net gain resulting from divestiture of certain operations was $536.3 million, due to the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026.
Interest income and other, net increased $12 million, primarily due to higher cash balances and interest rates in the current year, partially offset by non-core investment impairments.
Interest expense decreased $8 million, primarily due to reduced debt balances in the current year.
The effective tax rate for the quarter ended June 28, 2026, was 26.4% compared to 31.8% for the same period in fiscal 2025. The decrease was primarily due to lapping the discrete impact of changes in indefinite reinvestment assertions for certain foreign entities in the third quarter of fiscal 2025 (approximately 850 basis points), partially offset by impacts resulting from the divestiture of Starbucks retail operations in China in the third quarter of fiscal 2026 (370 basis points).
For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025
Net gain resulting from divestiture of certain operations was $536.3 million, due to the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026.
Interest income and other, net increased $6 million, primarily due to higher cash balances and interest rates in the current year.
Interest expense increased $14 million, primarily due to reduced savings from cross-currency interest rate hedging, partially offset by reduced debt balances in the current year.
43
The effective tax rate for the three quarters ended June 28, 2026, was 36.5% compared to 26.5% for the same period in fiscal 2025. The increase was primarily due to the $273 million discrete impact of changes in indefinite reinvestment assertions as a result of classifying Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 (approximately 640 basis points), impacts resulting from the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026 (approximately 240 basis points) and lapping the discrete impact of a tax status change for a certain foreign entity in the first quarter of fiscal 2025 (approximately 130 basis points).
44
Segment Information
Results of operations by segment (in millions):
North America
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-07-06 | BREWER BRADY | ceo, International | Sell | -2,229 | $104.00 | -$231,816 |
| 2026-06-11 | BREWER BRADY | ceo, International | Sell | -588 | $100.00 | -$58,800 |
| 2026-06-05 | BREWER BRADY | ceo, International | Sell | -1,641 | $94.33 | -$154,796 |
| 2026-05-05 | BREWER BRADY | ceo, International | Sell | -2,229 | $104.81 | -$233,621 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-11-13 10-K expected by 2026-11-26 (in 106 days)
- ~2027-01-27 10-Q expected by 2027-02-06 (in 181 days)
- ~2027-04-27 10-Q expected by 2027-05-07 (in 271 days)
- ~2027-07-28 10-Q expected by 2027-08-07 (in 363 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-07-29 10-Q Quarterly Report
- 2026-06-12 8-K Officer/Director Change
- 2026-05-20 8-K Other Events
- 2026-05-15 8-K Costs Associated with Exit
- 2026-04-28 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-28 10-Q Quarterly Report
- 2026-01-28 10-Q Quarterly Report
- 2026-01-28 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-17 8-K/A Officer/Director Change
- 2025-11-14 10-K Annual Report
- 2025-10-29 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-25 8-K Costs Associated with Exit; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-07-29 10-Q Quarterly Report
- 2025-07-29 8-K Earnings Release; Financial Statements and Exhibits