Starbucks Corporation

What they do

Starbucks purchases and roasts high-quality coffee and sells handcrafted beverages, food, and coffee/tea products through company-operated and licensed stores. It also sells packaged goods and licensed products via the Global Coffee Alliance with Nestlé. The company operates under brands including Starbucks Coffee, Teavana, Ethos, and Starbucks Reserve.

Revenue drivers

• North America segment — Largest segment, generated $7.395 billion in Q3 FY2026 net revenues (up 7% YoY), with 18,371 stores. Driven by comparable store sales growth of 8.1%, led by a 4.5% increase in transactions.
• International segment — Includes company-operated and licensed stores outside North America. Q3 FY2026 comparable store sales increased 5.7%, with 2.6% transaction growth and 3.1% average ticket growth. Segment performance was impacted by the divestiture of Starbucks retail operations in China.
• Global Coffee Alliance with Nestlé — Licenses Starbucks trademarks for packaged coffee and tea products sold through grocery and foodservice channels, contributing royalty revenue. The alliance is a key channel for product distribution beyond company-operated stores.

Recent performance

In Q3 FY2026 (ended June 28, 2026), global comparable store sales rose 7.9%, led by a 4.2% increase in transactions. Consolidated net revenues declined 1% to $9.3 billion, reflecting the Starbucks China transaction. GAAP operating margin expanded 60 bps to 10.5%, while non-GAAP operating margin expanded 430 bps to 14.4%. GAAP EPS was $0.91 (up 86% YoY) and non-GAAP EPS was $0.85 (up 70% YoY). The company reported four consecutive quarters of comp growth and two consecutive quarters of margin expansion.

Strategy

The 'Back to Starbucks' strategy focuses on enhancing customer experience, supporting store partners, and reestablishing the brand as a community coffeehouse. The company is investing in product development, marketing, and digital experiences, while also restructuring support functions and closing underperforming stores. Management is optimizing the mix of company-operated and licensed stores, including a joint venture for China retail operations. Capital allocation priorities include efficiency efforts and returning value to shareholders, as evidenced by tender offers funded by China sale proceeds.

Risks

• Brand relevance and execution — Failure to execute strategic initiatives or adapt to shifting consumer preferences could erode brand value and negatively impact financial results.
• Macroeconomic and geopolitical volatility — Inflation, trade restrictions, tariffs, geopolitical instability, and foreign exchange fluctuations could increase costs, disrupt supply chain, and hurt consumer spending.
• Dependence on North America — Heavy reliance on North America segment makes the company vulnerable to regional economic downturns or competition in that market.
• Restructuring and transformation risks — Store closures and support organization changes could incur higher costs, disrupt operations, and fail to achieve expected efficiency gains.

Outlook

Management raised fiscal 2026 guidance, citing growing durability of performance in the third quarter. They emphasize focus on executing the 'Back to Starbucks' plan with discipline to drive connection, community, and long-term value. The company expects to continue improving comparable sales and margins, amid a dynamic operating environment.