Starbucks (NASDAQ: SBUX) reported fiscal third-quarter results after the market closed today, posting an adjusted $0.50 per share on $9.5 billion in revenue. As expected, same-store sales fell for the sixth straight quarter.
The results come as the company faces slowing U.S. traffic, margin pressure, and intensifying global competition, testing CEO Brian Niccol’s turnaround strategy.
Analysts surveyed by LSEG projected earnings of $0.65 per share, down nearly 30% year-over-year from $0.93 in the same quarter last year, despite a modest 2% revenue gain.
Jefferies recently downgraded Starbucks to “Underperform,” warning that its stock — closing today at just under $93 per share — may be overvalued given growth and margin pressures, with a price target of $76.
Starbucks Q3 2025 Highlights
Revenue: $9.5 billion, up 4% year-over-year (3% on a constant currency basis).
EPS: $0.50 non-GAAP ($0.49 GAAP), down 46% year-over-year, impacted by $0.11 in one-time leadership and tax items.
Global Comparable Sales: Down 2%, with transactions down 2% and average ticket up 1%.
North America: Comparable sales down 2% (transactions –3%, ticket +1%); revenue up 2% to $6.9 billion; operating margin down to 13.3% from 21%.
International: Comparable sales flat (transactions +1%, ticket –1%); revenue up 9% to $2.0 billion; operating margin contracted to 13.6% from 15.6%.
Channel Development: Revenue up 10% to $483.8 million; operating margin fell to 45.1% from 53.7%.
Store Growth: 308 net new stores opened, bringing the total to 41,097 stores worldwide (53% company-operated, 47% licensed).
U.S. and China: Combined store count now represents 61% of the global portfolio, with 17,230 stores in the U.S. and 7,828 in China.
Operating Margin (Consolidated): GAAP margin contracted 680 basis points to 9.9%; non-GAAP margin contracted 660 basis points to 10.1%, driven by labor, leadership program investments, and inflation.
Tax Rate: Effective tax rate rose to 31.8% from 24.8% last year due to foreign reinvestment changes.
Starbucks Faces Mounting Pressure as Margins and Sales Lag
In the previous quarter, Starbucks posted $0.41 EPS, missing analyst estimates of $0.51, on $8.8 billion in revenue. Comparable sales in North America declined 1%, with transactions dropping 4% and a 3% increase in average ticket size only partially offsetting weaker traffic.
North American operating margin fell to 11.6% from 18% a year earlier, weighed down by labor and restructuring costs as the company pushed ahead with its “Back to Starbucks” operational overhaul.
While international revenue grew 6%, profitability outside the U.S. also came under pressure, with the Channel Development segment seeing revenue and margins shrink.
Starbucks is facing pressure in China, its second-largest market, where younger consumers are shifting toward competitors, including Luckin Coffee, which is now also launching in the U.S.
These results highlight the fragility of Starbucks’ turnaround. Niccol’s plan — built around menu simplification, new labor models, and a stronger loyalty program —has yet to produce a clear rebound in traffic or margin expansion.
What to Look Out For
Analysts will be focused on four things during Starbucks’ earnings call at 4:15 PM Eastern.
First, whether Starbucks plans to maintain or adjust its full-year guidance, particularly on earnings per share and comparable sales growth.
Second, how the company intends to stabilize North American traffic and restore margins through labor, productivity, and supply chain efficiencies.
Third, the outlook for international operations, especially in China, where the company may sell a stake in its operations.
Fourth, updates on Starbucks Rewards membership and digital initiatives that drive ticket size and customer engagement.
This is a breaking news story and will be updated as more information becomes available.
Globely News covers the game changers transforming the worlds of business, sports, politics, and technology. From AI and electric vehicles to the rise of China and the NFL's next stars, we've got you covered.