Starbucks (SBUX) Q3 2025 earnings

Introduction to Starbucks’ Earnings Report

Starbucks on Tuesday reported its sixth straight quarter of same-store sales declines as the company implements a turnaround strategy. CEO Brian Niccol said in a statement that the company’s comeback is ahead of schedule, based on his past experience, which includes turning around Chipotle Mexican Grill after a series of food-safety scandals.

Financial Results

The company reported fiscal third-quarter net income attributable to the company of $558.3 million, or 49 cents per share, down from $1.05 billion, or 93 cents per share, a year earlier. Excluding restructuring costs and other items, the company earned 50 cents per share. A discrete tax item and a one-time investment hosting the company’s three-day event for U.S. store managers weighed on the company’s earnings per share by 11 cents.

Key Financial Metrics

• Earnings per share: 50 cents adjusted
• Revenue: $9.5 billion vs. $9.31 billion expected
  Net sales rose 4% to $9.5 billion. However, global same-store sales declined 2%, a steeper drop than estimates of a 1.3% decrease.

Performance by Region

Starbucks’ North American cafes performed better than expected. The chain’s North American same-store sales fell 2%, a smaller decline than the 2.5% projected by Wall Street. Transactions fell 3%, but average ticket rose 1% in the quarter. In China, the company’s second-largest market, Starbucks reported same-store sales growth of 2% for the quarter. Transactions climbed 6%, but average ticket fell.

Turnaround Strategy

To bring back customers, Starbucks is doubling down on hospitality. The chain is rolling out its "Green Apron Service" program, which emphasizes customer interactions. Executives have said that the program tested successfully, leading the company to accelerate its rollout. The chain is also building fewer new U.S. locations, instead focusing on improving its current cafes. In recent years, Starbucks had removed seats from many of its cafes, citing the shift to mobile ordering and drive-thru transactions. But Niccol wants to replace thousands of removed seats as part of a broader effort to make its cafes comfortable again.

Future Plans and Investments

Over the next year, Starbucks plans to invest $500 million in labor, including the rollout of the "Green Apron Service" program. Looking ahead to fiscal 2026, Starbucks has big plans. Niccol said the chain will launch protein cold foam, improved artisanal food options, coconut-water based drinks, a new Starbucks app, and a "refreshed" Rewards program. The company plans to host an investor day in the fiscal second quarter of 2026.

Conclusion

Despite reporting its sixth straight quarter of same-store sales declines, Starbucks indicates that its turnaround strategy is gaining momentum. With a focus on hospitality, improvements to existing cafes, and new product launches, the company is working to regain its footing. The future will tell if these efforts will pay off, but for now, the signs are promising, with shares rising 4% in extended trading following the earnings report.

FAQs

Q: What was the main issue highlighted in Starbucks’ earnings report?

A: The main issue was the sixth straight quarter of same-store sales declines.

Q: How is Starbucks planning to turn its business around?

A: Starbucks is focusing on hospitality through its "Green Apron Service" program, improving existing cafes, and launching new products.

Q: What are Starbucks’ plans for its China business?

A: Starbucks has received interest from over 20 parties to sell a stake in its China business but wants to retain a meaningful stake.

Q: What new products and services is Starbucks planning to launch in fiscal 2026?

A: Starbucks plans to launch protein cold foam, improved artisanal food options, coconut-water based drinks, a new Starbucks app, and a "refreshed" Rewards program.

Q: How much is Starbucks planning to invest in labor over the next year?

A: Starbucks plans to invest $500 million in labor, including the rollout of the "Green Apron Service" program.