Starbucks Corporation (SBUX) FY2025 10-K and Q3 FY2026 10-Q Summary

Business

From the fiscal 2025 Annual Report on Form 10-K (accession 0000829224-25-000114).

Starbucks is the world's largest roaster, marketer, and retailer of specialty coffee, operating in 89 markets. It buys and roasts green coffee and sells it, along with handcrafted coffee, tea, and other beverages and a range of food items, through company-operated coffeehouses, and it licenses its trademarks and sells product to third-party store operators, grocery, and foodservice channels. Beverages were 73% of company-operated retail sales in fiscal 2025, food 23%, and all other merchandise 4%. Alongside the flagship Starbucks Coffee brand, the company sells under Teavana, Ethos, and Starbucks Reserve. Formed in 1985, Starbucks common stock trades on the Nasdaq Global Select Market under the symbol SBUX.

How revenue is earned. Three streams:

• Company-operated stores, 83% of fiscal 2025 net revenues. Starbucks owns the operations, captures the full retail ticket, and carries the store's operating costs and capital investment.
• Licensed stores, 12% of net revenues. Starbucks sells coffee, tea, food, related products, and equipment to the licensee and collects a royalty on the licensee's retail sales; the licensee funds operating costs and capital. Licensed stores carry a lower gross margin but a higher operating margin than company-operated stores, because the lower revenue is more than offset by costs the licensee bears.
• Other revenues, recorded mostly in Channel Development: packaged coffee, tea, and ready-to-drink beverages sold outside the store base, plus royalties from Nestlé under the Global Coffee Alliance and other collaborative partnerships.

Segments. Three reportable operating segments, with unallocated corporate expense reported in Corporate and Other:

• North America (U.S. and Canada), 74% of fiscal 2025 net revenues. The most mature business and the primary source of operating cash flow.
• International (China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America, the Caribbean), 21%. Markets sit at varying stages of development and can require support out of proportion to their current revenue and operating income.
• Channel Development, 5%. Roasted whole bean and ground coffees, single-serve products, ready-to-drink beverages such as Frappuccino and Starbucks Doubleshot, foodservice products, and other branded goods sold worldwide outside the company-operated and licensed store base. A large part of this segment runs under the licensed model of the Global Coffee Alliance with Nestlé; the global ready-to-drink businesses operate through collaborations with PepsiCo, Nestlé, and others.

Store base. At September 28, 2025 Starbucks had 40,990 stores, 21,514 company-operated (52%) and 19,476 licensed (48%). North America held 18,311 (11,018 company-operated, 7,293 licensed) and International 22,679 (10,496 company-operated, 12,183 licensed). Those International figures precede the divestiture of Starbucks' retail operations in China, completed March 30, 2026, on which 7,991 company-operated stores in China converted to licensed stores within the International segment, see the current quarter section below for the store base after that change. The mix of company-operated versus licensed in a given market turns on access to desirable retail space, the complexity and expected ultimate size of the market, and the ability to leverage regional support infrastructure.

Digital and loyalty. The Starbucks Card stored-value program and the linked Starbucks Rewards loyalty program are the core of customer engagement: registered cardholders are automatically enrolled in nearly all markets, members earn Stars paying by card, cash, credit or debit, or mobile wallet at all company-operated and most North America licensed stores, and Mobile Order and Pay allows advance ordering for pickup.

Supply chain. Starbucks controls substantially all coffee purchasing, roasting, packaging, and global distribution for its own operations; Nestlé controls distribution of Starbucks packaged coffee outside Starbucks stores under the Global Coffee Alliance and in some cases roasts and packages it. High-altitude arabica of the quality Starbucks seeks trades on a negotiated basis at a premium above the "C" commodity price. The company buys on fixed-price and price-to-be-fixed commitments and hedges "C" exposure with forwards, futures, and collars; purchase commitments plus existing inventory were expected to supply green coffee through fiscal 2026. Green coffee purchase commitments were 88% of total purchase obligations. Ten farmer support centers, including one in Yunnan Province, China, work with growing communities on quality, yield, and climate adaptation. Dairy and plant-based alternatives (oat, almond) are the other significant commodity purchases.

Strategy. The "Back to Starbucks" strategy, announced in the fourth quarter of fiscal 2024, aims to return the business to growth by supporting store partners, improving the customer experience, reestablishing the community coffeehouse, and strengthening the brand through product, marketing, and digital work. In the fourth quarter of fiscal 2025 the company announced a restructuring plan under that strategy involving coffeehouse closures and further transformation of the support organization, after assessing whether each store had a viable path both to the physical environment consistent with the brand and to acceptable financial performance.

People. Approximately 381,000 employees worldwide at September 28, 2025, about 223,000 in the U.S. (roughly 214,000 in company-operated stores) and about 158,000 outside it. Partners at approximately 6% of U.S. company-operated stores are represented by unions. Benefits include the Starbucks College Achievement Plan covering 100% of tuition for a first-time online bachelor's degree at Arizona State University for partners averaging 20+ hours a week, Bean Stock equity grants (more than 230,000 partners received one in fiscal 2025), healthcare, and parental leave of up to 18 weeks fully paid for birth parents.

Leadership. Brian Niccol joined as chairman and chief executive officer in September 2024 from Chipotle Mexican Grill, where he was CEO from 2018 to 2024. Cathy Smith joined as chief financial officer in March 2025 from Nordstrom, having previously been CFO of Target. Mike Grams has served as chief operating officer since June 2025. Brady Brewer has been chief executive officer, Starbucks International since April 2024. Sara Kelly is chief partner officer; Pilar Ramos joined as chief legal officer in November 2025.

Risk factors

From the fiscal 2025 Annual Report on Form 10-K (accession 0000829224-25-000114), condensed.

Brand value is the asset. Starbucks' economics rest on a brand that can be eroded by developments inside or outside the company's control, difficulties executing strategic initiatives, missteps by partners or licensees, or negative commentary, accurate or not, amplified by social and video platforms before the company can investigate or respond. Erosion has in the past triggered boycotts of stores, products, and brand, with material consequences for demand.

Execution of Back to Starbucks and the restructuring plan. The strategic initiatives, service model, support-organization transformation, partner investment, coffeehouse closures and renovations, digital and loyalty expansion, disciplined global footprint growth, may not generate expected returns. Restructuring has already produced significant costs, and the anticipated savings rest on estimates and assumptions subject to uncertainty. The initiatives may be disruptive internally and to customers and may be viewed negatively by stakeholders.

Strategic transactions. Large acquisitions, divestitures, partnerships, and joint ventures may not close, may not be integrated successfully, or may take longer than expected to deliver expected revenue, synergies, and cost savings, which has in the past required, and may again require, assessment of impairment of goodwill and intangibles.

Concentration in North America. North America was approximately 74% of fiscal 2025 net revenues. A slowdown there, particularly in the U.S., has in the past materially affected overall results and could again, with no other segment positioned to offset it. Because North America is the primary source of operating cash flow, weakness there also constrains funding for international expansion, strategic initiatives, and shareholder returns.

International dependence. Growth targets depend on sustained performance in markets run by large regional licensees and in key company-owned markets outside North America. International success turns on factors distinct from the U.S., regional taste preferences, consumer acceptance, differing regulatory regimes, and carries higher occupancy and operating costs plus, in earlier-stage markets, higher operating expense as a percentage of revenue.

Coffee and commodity cost and availability. Coffee price and supply are highly volatile, driven by weather and extreme weather, water availability, natural disasters, crop disease, input costs, inventory levels, political and economic conditions in producing countries, speculative trading, and tariffs. Climate change may intensify these risks; droughts or frosts in Brazil have driven price increases in the past. Hedging is only partial, and the company may have limited ability to pass increased costs to licensees. Dairy, plant-based alternatives, tea, cocoa, produce, meats, eggs, energy, and packaging carry comparable exposure.

Trade policy and tariffs. New, increased, threatened, or retaliatory tariffs, quotas, embargoes, sanctions, safeguards, or customs restrictions by the U.S. and foreign governments have in the past adversely affected results and could again, and adapting operations to comply can be time-consuming and expensive.

Supply chain interruption. Loss of a roasting plant, logistics interruptions, trade restrictions, pandemics, labor shortages, natural disasters, or geopolitical conflict could materially disrupt production and delivery. For certain products the company depends on a limited number of suppliers. Separately, even absent acute disruption, inaccurate forecasting can produce expedited shipping costs and stockouts, or inventory write-offs on overestimated demand.

Reliance on key business partners. The entire global Channel Development business runs through partners, and it is heavily reliant on Nestlé, which holds global rights to distribute certain Starbucks-branded packaged goods. Retail licensed operations are concentrated among a few large licensees whose access to capital and ability to meet development and renovation targets Starbucks does not control.

Macroeconomic sensitivity. As a retailer dependent on discretionary spending, results are exposed to job loss, inflation, interest rates, taxation, credit access, public health crises, trade disputes, and geopolitical instability, and to lasting changes in consumer spending habits if uncertainty persists. Named factors include rising real estate costs, supply chain disruption, climate and extreme weather, changes in tax law such as the One Big Beautiful Bill Act enacted in the U.S. in July 2025, adverse litigation outcomes, government shutdowns and election-related impacts, trade agreement changes, tariffs and retaliation, labor unrest, and foreign currency volatility. A credit market disruption or a ratings downgrade would raise borrowing costs and could impair access to capital; distress among suppliers or licensees could raise bad debt expense, and a licensee insolvency could disrupt operations or force a market exit.

Labor costs and unionization. Wages and benefits are among the two most significant costs in the business. Since September 2021, partners at a number of company-operated stores have sought union representation; unions have secured representation rights at around 6% of more than 10,000 U.S. company-operated stores, and the company has been engaged in bargaining for initial agreements. Difficult negotiations, unfavorable terms, or the legal constraints on unilateral action where a petition has been filed could add costs, reduce flexibility, and increase operational complexity. Work stoppages and other disruptions from union activity have already occurred.

Consumer preference shifts. Reduced discretionary spending, non-acceptance of new products or platforms, and health concerns about caffeine, dairy, sugar, or allergens, accurate or not, can reduce demand, as can dietary changes including use of weight-loss drugs.

Food and beverage safety. Contamination, mislabeling, adulteration, or tampering at any stage, or merely reports of it, including incidents involving competitors or shared suppliers, could trigger regulatory action, litigation, recalls, store closures, and reputational damage.

New store economics. Development costs have risen with construction labor inflation and material and equipment expense. Each new store carries substantial startup cost and a ramp-up period, faces site selection, lease, permitting, and contractor risk, and may cannibalize nearby locations.

Competition. The specialty coffee market is highly competitive on quality, innovation, service, convenience, and price, and Starbucks does not hold leadership positions in every segment. Large quick-service competitors in the U.S. may pull traffic and ticket; well-funded players contest the packaged and ready-to-drink categories; competitors may price at or below Starbucks, forcing higher promotional spend or lower prices.

Regulation, litigation, and taxation. Compliance spans trade, labor, healthcare, food and beverage, sanitation, safety, environmental, labeling, and anti-bribery law across jurisdictions with varying interpretations. Environmental rules on carbon, plastic, and commercial water use, sweetened-beverage taxes, packaging levies, and extended producer responsibility regimes may raise costs. The OECD's Pillar Two 15% global minimum tax has been enacted in several countries where Starbucks operates. The company is routinely party to litigation including class and collective actions on employment practices, food safety, data privacy, discrimination, personal injury, advertising, intellectual property, and securities matters.

Cybersecurity, data privacy, and IT dependence. Point-of-sale, mobile, payment, delivery, and rewards systems hold personal, financial, and confidential data. The company has experienced cyber-attacks and expects threats to evolve, particularly with the adoption of artificial intelligence. Privacy regimes, GDPR and the U.K. equivalent, China's PIPL and Data Security Law, the CCPA and other U.S. state laws, impose escalating obligations, and models such as Starbucks Digital Solutions can place Starbucks in the data-controller role in licensed markets. Failure or interruption of the underlying technology, whether from outages, attacks, software flaws, or misconfiguration, could materially affect availability and results.

Responsible business, disclosure, and activism. Evolving and inconsistent governance and sustainability disclosure rules, extended producer responsibility obligations, the EU's Corporate Sustainability Reporting Directive, California's climate disclosure requirements, raise compliance cost and noncompliance risk, and reported data may require adjustment. Objections may come both from those who consider these initiatives too ambitious and from those who consider them insufficient. Activist shareholder campaigns have caused expense and can divert management and Board attention and create stock price volatility unrelated to fundamentals.

Guidance and stock price. The company has failed to meet announced guidance or market expectations in the past, which adversely affected the stock price, and further misses, particularly on operational and financial results, shareholder returns, and the success of Back to Starbucks, would likely produce decline or increased volatility.

Intellectual property. Not all trademarks are registered in every market, enforcement can be costly and, in some jurisdictions, inadequate, trade secrets can be compromised, and licensees holding rights to Starbucks intellectual property may act in ways that diminish its value.

Management's discussion and analysis, fiscal 2025

From the fiscal 2025 Annual Report on Form 10-K (accession 0000829224-25-000114). The fiscal year ends on the Sunday closest to September 30; fiscal 2025, 2024, and 2023 each had 52 weeks.

Fiscal 2025 was a year of heavy reinvestment: revenue grew modestly, margin fell sharply, and the fourth quarter carried a large restructuring charge.

Consolidated results. Total net revenues rose 3% to $37.2 billion from $36.2 billion, an increase of about $1 billion, driven by net new company-operated stores, higher Global Coffee Alliance revenue, and the acquisition of 23.5 Degrees Topco Limited, partially offset by lower comparable store sales and a decline in the licensed store business. Consolidated operating income fell to $2.9 billion from $5.4 billion, and operating margin contracted 710 basis points to 7.9% from 15.0%. The company attributed the contraction to restructuring costs for coffeehouse closures and support-organization simplification (approximately 240 basis points), deleverage (approximately 210 basis points), Back to Starbucks investments largely in labor hours (approximately 130 basis points), and inflation (approximately 80 basis points). Diluted EPS declined to $1.63 from $3.31.

Revenue composition. Company-operated store revenue rose $979 million: net new company-operated store growth of 5%, or 1,010 stores, added roughly $1.2 billion before the 627 restructuring closures late in the fourth quarter, and the conversion of 113 licensed stores to company-operated following the 23.5 Degrees acquisition added $131 million; a 1% decline in comparable store sales cost $408 million, reflecting a 2% decline in comparable transactions partly offset by a 1% increase in average ticket from annualized prior-year pricing. Licensed store revenue fell $155 million, on lower product, equipment, and royalty revenue from North America licensees ($143 million), the 23.5 Degrees acquisition ($36 million), and unfavorable currency ($22 million), partly offset by higher International licensee revenue ($79 million). Other revenues rose $184 million, on Global Coffee Alliance growth ($99 million) and increased cocoa butter sales to third parties ($66 million).

Operating expenses. Product and distribution costs rose 50 basis points as a percentage of revenue, primarily on inflation. Store operating expenses rose 360 basis points as a percentage of total revenue and 410 basis points as a percentage of company-operated store revenue, on deleverage (approximately 200 basis points), additional labor (approximately 160 basis points), and increased marketing (approximately 90 basis points). General and administrative expense rose $94 million, primarily on the Leadership Experience 2025 conference ($81 million). Restructuring and impairments were $892 million, including $352.8 million for impairment and disposition of company-operated store assets and $239.3 million primarily for accelerated amortization of right-of-use lease assets and other lease exit costs. Income from equity investees fell $53.4 million, primarily on lower income from the North American Coffee Partnership joint venture.

Below the line. Interest income and other, net fell $10 million on lower cash balances and rates. Interest expense fell $19 million on cross-currency interest rate hedging savings, partly offset by higher rates on refinanced long-term debt. The effective tax rate was 25.9% versus 24.3%, the increase driven by the discrete impact of changes in indefinite reinvestment assertions for certain foreign entities in the third quarter (approximately 290 basis points), partly offset by a tax status change for a foreign entity in the first quarter (approximately 120 basis points).

By segment.

• North America: revenue up $364 million, or 1%. Net new company-operated store growth of 4%, or 441 stores, added $980 million before the 584 restructuring closures; a 2% comparable store sales decline cost $419 million, on a 4% transaction decline partly offset by a 2% ticket increase. Operating income fell 41% to $3.2 billion from $5.4 billion and margin contracted 830 basis points to 11.5%, on deleverage (approximately 310 basis points), restructuring costs, and Back to Starbucks labor investment (approximately 180 basis points).
• International: revenue up $481 million, or 7%, on 5% net new company-operated store growth, or 526 stores ($264 million), the 113-store conversion from the 23.5 Degrees acquisition ($95 million), and higher licensee product and royalty revenue ($79 million) from 378 net new licensed stores. Operating income fell 9% to $950 million from $1.0 billion and margin contracted 210 basis points to 12.1%, on increased promotional activity (approximately 170 basis points) and restructuring and impairment costs (approximately 110 basis points).
• Channel Development: revenue up $102 million, or 6%, on Global Coffee Alliance growth ($99 million). Operating income fell 4% to $885 million from $926 million and margin contracted 500 basis points to 47.3%, on lower North American Coffee Partnership joint venture income (approximately 350 basis points) and higher global product costs (approximately 90 basis points).
• Corporate and Other: operating loss rose 7% to $2.1 billion from $1.9 billion, largely on support-organization restructuring costs, primarily severance.

Liquidity and capital. Cash and investments were $3.7 billion at September 28, 2025 versus $3.8 billion a year earlier, with approximately $1.6 billion held in foreign subsidiaries. During the third quarter of fiscal 2025 the company replaced its $3.0 billion unsecured five-year revolving credit facility with a new $3.0 billion facility maturing June 13, 2030, expandable by an additional $1.0 billion subject to bank agreement; nothing was outstanding under it, nor under the $3.0 billion commercial paper program, leaving $3.0 billion of available contractual borrowing capacity. Operating cash flow was $4.7 billion versus $6.1 billion, the decline driven by $1.9 billion lower net earnings and a $451.2 million increase in inventories (green and roasted coffee, on elevated prices), partly offset by a $713.2 million increase in loss on disposal, impairment, and accelerated amortization and higher accounts payable. Investing used $2.5 billion versus $2.7 billion, with capital expenditures down $472.0 million on reduced North America store investment and renovation, partly offset by the 23.5 Degrees acquisition. Financing used $2.3 billion versus $3.7 billion, primarily because there were no share repurchases. Capital expenditures were $2.3 billion versus $2.8 billion. Starbucks returned $2.8 billion to shareholders versus $3.8 billion the prior year; dividends alone were $2.8 billion versus $2.6 billion. No common stock was repurchased in fiscal 2025, against 12.8 million shares for $1.3 billion in fiscal 2024, and 29.8 million shares remained available under current authorizations. A fourth-quarter dividend of $0.62 per share was declared for payment November 28, 2025, an expected payout of approximately $704.8 million. Total current and long-term material cash requirements were $36.5 billion at year end.

Outlook given at the time. Management expected North America store closures to be substantially complete in fiscal 2025 and International closures in the first half of fiscal 2026, a resulting fiscal 2026 reduction in baseline North America company-operated revenue partly offset by sales transfer to nearby stores, and a slightly accretive effect on future operating margins. Macroeconomic pressure from new tariffs and dynamic coffee prices was expected to continue. The Green Apron Service model had gone live across the full U.S. company-operated portfolio in the fourth quarter. Management also pointed forward to working with new strategic joint venture partner Boyu Capital to accelerate long-term growth in China.

Current quarter, third quarter of fiscal 2026

From the Quarterly Report on Form 10-Q for the quarter ended June 28, 2026 (accession 0000829224-26-000130) and the earnings release furnished July 29, 2026 (accession 0000829224-26-000129).

The quarter is the first to carry the China divestiture through the income statement, and the two effects run in opposite directions: reported revenue fell because roughly 8,000 Chinese company-operated stores left the consolidated base, while margin expanded because those stores became a licensed relationship. Underneath that, the operating turnaround accelerated, the company described four consecutive quarters of comparable store sales growth and two consecutive quarters of margin expansion.

Headline results. Consolidated net revenues decreased 1% to $9.3 billion from $9.5 billion, including on a constant currency basis, primarily because of the conversion of Starbucks retail operations in China to the licensed joint venture model. Global comparable store sales rose 7.9%, on a 4.2% increase in comparable transactions and a 3.5% increase in average ticket. North America comps rose 8.1% (transactions +4.5%, ticket +3.5%); the U.S. rose 7.9% (transactions +4.2%, ticket +3.6%), driven by higher delivery sales and strength in customer food attach and beverage modifications; International comps rose 5.7% (ticket +3.1%, transactions +2.6%). GAAP operating margin expanded 60 basis points to 10.5% and non-GAAP operating margin expanded 430 basis points to 14.4%. GAAP earnings per share were $0.91, up 86%; non-GAAP earnings per share were $0.85, up 70%. The effective tax rate was 26.4% versus 31.8%, the decrease driven by lapping the prior-year change in indefinite reinvestment assertions (approximately 850 basis points), partly offset by the China divestiture (370 basis points).

Revenue bridge. Total net revenues fell $133 million: company-operated store revenue fell $306 million, as the China conversion removed $776 million and unfavorable currency cost $52 million, partly offset by $524 million from the 7.9% comparable store sales increase; licensed store revenue rose $95 million, on higher product and royalty revenue from existing licensees ($58 million) and from the newly formed China joint venture ($53 million), partly offset by lower equipment sales ($16 million); other revenues rose $78 million, primarily on Global Coffee Alliance growth ($89 million).

Margin drivers. Product and distribution costs fell 100 basis points as a percentage of revenue, the China conversion contributed approximately 130 basis points and lower inflation paired with tariff refunds approximately 80 basis points, partly offset by mix shift of approximately 110 basis points. Store operating expenses fell 90 basis points as a percentage of total revenue but rose 30 basis points as a percentage of company-operated store revenue, as labor investment in support of Back to Starbucks (approximately 190 basis points) and increased reserves for self-insured claims (approximately 100 basis points) outweighed sales leverage (approximately 250 basis points). General and administrative expense fell $78 million, on lapping the Leadership Experience 2025 ($81 million), restructuring-related savings ($63 million), and the China conversion ($42 million), partly offset by higher performance-based compensation ($79 million) and China transaction expenses ($44 million). Restructuring and impairments rose $282 million, largely on impairment of Starbucks Reserve and Roastery locations and partner severance. Income from equity investees rose $22 million, primarily from the China joint venture.

Segment results.

• North America: net revenues $7,395.1 million, up 7% from $6,927.0 million; operating income $1,008.9 million, up 10% from $918.7 million; operating margin 13.6%, up 30 basis points from 13.3%. Margin gained from sales leverage (approximately 340 basis points), lapping the Leadership Experience 2025 (approximately 120 basis points), and lower inflation paired with tariff refunds (approximately 110 basis points), against higher restructuring costs (approximately 240 basis points), labor investment (approximately 190 basis points), and product mix shift (approximately 100 basis points). Store count 18,371, down 2%.
• International: net revenues $1,322.6 million, down 34% from $2,010.7 million, as the China conversion removed $780 million of company-operated revenue, partly offset by product and royalty revenue from the new China joint venture ($53 million) and other licensees ($50 million). Operating income $252.8 million, down 7% from $272.7 million; operating margin 19.1%, up 550 basis points from 13.6%, as the China conversion added approximately 800 basis points against approximately 290 basis points of higher restructuring costs. Store count 22,933, up 3%.
• Channel Development: net revenues $587.9 million, up 22% from $483.8 million, primarily on Global Coffee Alliance growth ($89 million). Operating income $306.2 million, up 40% from $218.4 million; operating margin 52.1%, up 700 basis points from 45.1%, driven by tariff impacts including refunds (approximately 1,370 basis points), partly offset by product mix shift (approximately 470 basis points) and lower North American Coffee Partnership income relative to segment revenue growth (approximately 260 basis points).
• Corporate and Other: operating loss increased 24% to $588 million from $474 million, on higher restructuring costs ($73 million), performance-based compensation ($58 million), and China transaction expenses ($44 million), partly offset by restructuring-related savings ($53 million).

China divestiture. On March 30, 2026 Starbucks completed the divestiture of its retail operations in China. Funds managed by Boyu Capital acquired a 60% interest based on a cash-free, debt-free mutually agreed total enterprise value of approximately $4 billion; Starbucks retained 40% and continues to own and license the Starbucks brand and intellectual property to the joint venture. The transaction was partially financed with debt issued by the new joint venture, and Starbucks received total consideration of $3.1 billion inclusive of its share of the debt proceeds. The retained 40% interest was carried at approximately $1.2 billion under the equity method. Starbucks derecognized net assets with a carrying value of $3.4 billion and reclassified approximately $282.8 million of cumulative translation adjustment losses and $99.7 million of net investment hedge losses out of accumulated other comprehensive income into earnings, producing a pre-tax gain of $536.3 million. Total incremental income tax expense on the gain is approximately $198.6 million, of which approximately $147.8 million was recognized in the third quarter and the remainder is expected in the fourth quarter; transaction costs were approximately $44.1 million in the quarter and $73.8 million year to date. On completion, 7,991 company-operated stores converted to licensed stores within the International segment. In the quarter, revenues generated from the joint venture were $52.5 million against related product and distribution costs of $18.5 million, with $30.7 million of accounts receivable outstanding at June 28, 2026. Starbucks and Boyu have a shared long-term aspiration to grow to as many as 20,000 locations in China over time. Management expects the licensed joint venture model to continue producing lower revenues and higher operating margin than the historical company-operated model.

Debt reduction. In May 2026 Starbucks completed cash tender offers and repurchased approximately $1.3 billion aggregate principal amount of its senior notes using cash proceeds from the China divestiture: $273.5 million of the $750.0 million 4.500% notes due May 2028; $321.8 million of the $500.0 million 4.800% notes due May 2030; $110.4 million of the $500.0 million 5.000% notes due February 2034; $410.2 million of the $500.0 million 5.400% notes due May 2035; and $200.0 million of the $1.0 billion 4.500% notes due November 2048. Settlement completed on May 20, 2026, after which the company did not intend to purchase additional notes; it purchased none of its 4.000% notes due 2028, 4.900% notes due 2031, or 4.800% notes due 2033. An immaterial gain on partial extinguishment was recognized in interest income and other, net.

Tariff refunds. On February 20, 2026 the U.S. Supreme Court ruled that reciprocal tariffs imposed under the International Emergency Economic Powers Act were unlawful; Starbucks imports had been subject to those tariffs. Effective April 20, 2026, U.S. Customs and Border Protection launched a platform for refund requests, Starbucks submitted requests in the third quarter for qualifying tariffs paid, and it has received substantially all of the refunds requested. The refunds were recorded in product and distribution costs and largely offset related tariffs incurred in the first three quarters of fiscal 2026.

Restructuring. Under the fiscal 2025 plans, 20 stores closed in the quarter and 247 year to date, with $10.0 million and $115.9 million respectively charged to restructuring and impairments. Two fiscal 2026 plans are in progress: one approved in the second quarter to relocate certain support functions to an additional office in Nashville, Tennessee, cited for proximity to key suppliers, regional talent depth notably in technology, and alignment with expected coffeehouse growth; and one announced in the third quarter for further transformation of the global support organization and non-retail facilities and for reducing the operational complexity of Starbucks Reserve and Roastery locations, which triggered a reassessment and impairment of that asset group. Fiscal 2026 plan charges were $292.6 million in the quarter and $299.9 million year to date, consisting of disposal and impairment of store assets, primarily the Reserve and Roastery impairment, and employee severance and separation costs. Of the $292.6 million quarterly charge, $167.9 million fell in North America, $38.8 million in International, and $85.9 million in Corporate and Other.

Store base. Starbucks opened 175 net new stores in the quarter, ending with 41,304 stores, 33% company-operated and 67% licensed, an increase of about 1% year over year. U.S. stores were 16,933, or 41% of the global portfolio.

Year-to-date position. Through three quarters, total net revenues rose $1.2 billion, with company-operated store revenue up $628 million (a 5.9% comparable store sales increase contributing $1.2 billion, against $729 million removed by the China conversion), other revenues up $364 million, and licensed store revenue up $162 million. Operating margin contracted 20 basis points. The year-to-date effective tax rate was 36.5% versus 26.5%, driven by a $273 million discrete charge from releasing indefinite reinvestment assertions on classifying the China operations as held for sale (approximately 640 basis points), the divestiture itself (approximately 240 basis points), and lapping a prior-year foreign entity tax status change (approximately 130 basis points). North America operating income fell 10% to $2.6 billion with margin down 210 basis points to 11.8%, on labor investment of approximately 240 basis points; International operating income rose 29% to $934 million with margin up 460 basis points to 17.2%; Channel Development operating income rose 21% to $752 million though margin contracted 180 basis points to 44.8%.

Liquidity. Cash and investments were $3.9 billion at June 28, 2026 versus $3.7 billion at September 28, 2025, with approximately $1.1 billion held in foreign subsidiaries. Nothing was outstanding under the $3.0 billion revolving credit facility, the $3.0 billion commercial paper program, or two Japanese yen credit facilities (¥5.0 billion, or $30.9 million, maturing December 30, 2026, and ¥10.0 billion, or $61.8 million, maturing March 27, 2027), leaving $3.0 billion of available contractual borrowing capacity. Year to date, operating activities provided $3.6 billion versus $3.4 billion, an increase of $238.4 million on $125.5 million higher net earnings and favorable working capital. Investing activities provided $1.6 billion versus using $2.1 billion, a $3.7 billion favorable swing from $2.5 billion of net China divestiture proceeds plus $1.0 billion lower capital expenditures. Financing used $4.9 billion versus $0.4 billion, a $4.6 billion increase driven by $2.8 billion of long-term debt repayments and the absence of new debt issuance against $1.7 billion raised in the prior year. No common stock was repurchased year to date, and 29.8 million shares remained available under current authorizations. Total fiscal 2026 capital expenditures are expected to be lower than fiscal 2025.

Legal. Starbucks is involved in various ordinary-course proceedings, including litigation associated with labor union organizing efforts, certified employment class or collective actions, customer injury claims, shareholder-related actions, and consumer fraud claims, but as of the filing date it was not party to any proceeding management believes could have a material adverse effect, and it believes the risk of a material contingent loss from the union-related matters is remote.

Fiscal 2026 guidance, raised July 29, 2026. Growth targets are relative to fiscal 2025 non-GAAP measures unless specified: fourth-quarter U.S. comparable store sales growth of 6.5% or greater, leading to full-year U.S. comparable store sales growth slightly greater than 6.0% and full-year global comparable store sales growth nearing 6.0%; consolidated net revenues flat to slight growth year over year; non-GAAP consolidated operating margin greater than 11.0%; non-GAAP earnings per share of $2.55 to $2.65; and approximately 600 to 650 net new coffeehouses globally across company-operated and licensed businesses. The guidance reflects Starbucks China as a joint venture licensee structure in the second half of fiscal 2026 and as a company-operated business in the first half.

Management's framing. The company expects certain macroeconomic pressures, tariff impacts on product and distribution costs, and elevated coffee pricing, to continue easing into the fourth quarter, and says its focus is on driving consistency at scale while maintaining a healthier cost structure. As the international business shifts toward a predominantly licensed model, management expects international to be a meaningful contributor to coffeehouse growth over time and is applying discipline to new-store returns.

Subsequent events

From the Quarterly Report on Form 10-Q for the quarter ended June 28, 2026 (accession 0000829224-26-000130) and the earnings release furnished July 29, 2026 (accession 0000829224-26-000129).

The Q3 fiscal 2026 Form 10-Q does not include a subsequent-events note, and no acquisition, divestiture, financing, borrowing, or litigation outcome is disclosed in it as having occurred after the June 28, 2026 quarter end. The two post-period items disclosed in the quarter's filings are:

• Dividend paid after quarter end. The Board approved a quarterly cash dividend of $0.62 per share during the third quarter, payable August 28, 2026 to shareholders of record as of the close of business on August 14, 2026. The earnings release noted 65 consecutive quarters of dividend payouts, with a 17% compound annual growth rate over that span.
• Fiscal 2026 guidance raised on July 29, 2026, after the quarter closed, the targets set out in the current-quarter section above.

Two transactions that might otherwise read as post-period items fall inside the quarter and are accounted for in it: the China divestiture closed March 30, 2026 (publicly announced as finalized on April 2, 2026, accession 0000829224-26-000064), and the senior note tender offers settled May 20, 2026 (accession 0000829224-26-000094).