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    SBUX
    Earnings call· Jun 2026(Q3 FY26)

    STARBUCKS Q3 FY26 earnings call SBUX

    Jul 29, 2026 Source

    Executive summary

    Starbucks Q3 FY26 — Strong Global Comps and Margin Expansion Drive Raised Full-Year Guidance

    Starbucks delivered strong Q3 FY26 results, with global comparable sales and consolidated operating margin expanding significantly, driven by the "Back to Starbucks" plan's focus on operational improvements and customer experience. The company raised its full-year guidance, confident in its durable top-line momentum and margin expansion, despite the impact of the China JV transition and ongoing consumer landscape variability. Strategic investments in Coffee House uplifts and digital innovation are accelerating, while the company addresses underperforming stores to strengthen its foundation for future growth.

    Highlights

    5

    • Consolidated net revenues reached $9.3 billion, driven by sequentially improving global comparable sales growth of 7.9%.

    • Consolidated operating margin expanded by 430 basis points year-over-year to 14.4%, marking the second consecutive quarter of expansion.

    • Earnings per share grew 70% year-over-year to $0.85, a meaningful step towards earnings recovery.

    • North America company-operated comparable sales increased 8.1%, with U.S. comps up 7.9% driven by balanced transaction and ticket growth.

    • The company raised its full fiscal year 2026 guidance for U.S. comp growth (to >6%), global comp growth (to ~6%), consolidated net revenues (flat to slightly higher), consolidated margin (to >11%), and EPS (to $2.55-$2.65).

    Concerns

    4

    • Consolidated net revenues were down 1% from the prior year, largely driven by the transition of the China retail business to a new joint venture license structure.

    • North America licensed Coffee House net revenues were roughly flat despite 41 net closures in the quarter.

    • Coffee remained a cost headwind in the quarter, though its impact was lower than the first two quarters of the fiscal year.

    • The company is gaining deeper visibility into some underperforming coffee houses in North America, which could result in additional closures.

    Guidance & targets

    16
    CategoryTargetConfidence
    U.S. comparable sales growth
    6.5% or better
    high materiality
    High
    Full fiscal year 2026 U.S. comparable sales growth
    a little more than 6%
    high materiality
    High
    Full fiscal year 2026 global comparable sales growth
    nearing 6%
    high materiality
    High
    Full fiscal year 2026 consolidated net revenues
    flat to slightly higher year-over-year
    high materiality
    High
    Full fiscal year 2026 consolidated operating margin
    greater than 11%
    high materiality
    High
    Full fiscal year 2026 EPS
    $2.55 and $2.65
    high materiality
    High
    Full fiscal year 2026 net new coffee house openings
    approximately 600 to 650
    medium materiality
    High
    North America net new company-operated unit growth
    modest
    medium materiality
    Medium
    International unit growth contribution
    meaningful contributor
    medium materiality
    High
    Coffee House uplifts completed
    at least 1,500
    medium materiality
    High
    Coffee House uplifts acceleration
    accelerating further
    medium materiality
    High
    Coffee price pressures
    continue easing
    medium materiality
    High
    Fiscal 2026 consolidated G&A dollars
    run below fiscal 2023 levels
    medium materiality
    High
    Effective tax rate
    mid-20s
    low materiality
    High
    Cost savings plan
    $2 billion
    high materiality
    High
    China coffee houses
    up to 20,000
    medium materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Consolidated
    Net revenues were down year-over-year largely due to the transition of the China retail business to a new joint venture license structure. Operating margin expanded 430 bps year-over-year.
    Global comps: 7.9%Global transaction growth: >4%
    		$9.3B-1%—14.4%
    North America
    Led performance in the quarter with strong comparable sales. Operating margin grew year-over-year for the first time since Q1 FY24. Licensed revenues were roughly flat year-over-year due to net store closures.
    Comparable store sales: 8.1%U.S. comps: 7.9%U.S. transaction growth: 4.2%U.S. average ticket growth: 3.6%Store count: 18,371Net new openings (company-operated): 27Net closures (licensed): 41
    		$7.4B———
    International
    Sixth consecutive quarter of positive system-wide comps. Japan was a key driver of strength. China retail operations were deconsolidated and reported as a licensed business, with JV economics reflected in income from equity investees. The China JV is expected to build economics over time and aims for 20,000 coffee houses.
    Company-operated comparable store sales: 5.7%Net new openings: 189Store count: 22,933China net revenues (attributable): $53MChina operating margin (attributable): >100%
    		$1.3B——$300.9M
    Channel Development
    Helped by coffee inflation. Multi-serve refreshers concentrate and Sweet Cream are generating strong engagement.
    		$587.9M22%——

    Operational metrics

    13
    Consolidated operating margin
    14.4%expanded 430 bps YoY
    Q3 FY26

    Second consecutive quarter of consolidated margin expansion, largely driven by sales leverage, cost savings, lower inflation, and reciprocal tariff refunds.

    EPS
    $0.85grew 70% YoY
    Q3 FY26

    Meaningful step towards earnings recovery.

    Consolidated product and distribution costs
    30.3%
    Q3 FY26

    The Q3 rate includes the impact of reciprocal tariff refunds. Year-to-date metric provides a more normalized perspective.

    Effective tax rate
    21.8%moderated vs prior year
    Q3 FY26

    Reflecting favorable updates to full-year tax estimates and a cumulative catch-up adjustment.

    Debt repaid
    $1.8B
    Q3 FY26

    Using a portion of China transaction proceeds.

    Leverage ratio
    2.9x
    Q3 FY26

    Reduced to support investment-grade profile and financial flexibility.

    Starbucks Rewards 90-day active members
    35.8Mgrew QoQ and YoY
    Q3 FY26

    New program exceeding expectations on engagement and average stored value card reload amounts.

    Pricing contribution to ticket growth
    <1%
    Q3 FY26

    Pricing contributed less than a point of ticket growth in the quarter.

    Coffee House uplifts completed
    1,000+
    Q3 FY26 YTD

    Surpassed fiscal 2026 goal ahead of plan. Early data shows positive impact on transactions and brand halo.

    Grow Coffee House ranking (4+ shots up)
    2/3>5 points QoQ, >40 points since launch
    Q3 FY26

    Indicates operational improvement and consistency.

    Food availability rate
    ~99%~10 points better YoY
    Q3 FY26

    Improved due to supply chain work, better ordering guidance, and expanded daily delivery.

    Marketing spend
    >2%
    Q3 FY26

    Team is investing in driving transactions, brand building, and loyalty, with no diminishing returns.

    International portfolio managed through license structure
    ~90%
    Q3 FY26

    Following the China JV transition, enabling a capital-light model for scaling.

    Industry KPIs

    3
    MetricValueDetails
    Comparable sales comps7.9%%
    Global system wide sales7.9%%
    Net unit growth development pipeline600 to 650coffee houses

    Product announcements

    9
    ProductTypeDetails
    Customizable Energy Refreshers (Blue Coconut, Mango)update
    Sparkling Beverages (Spritzers)launch
    Smoore's coffee lineuplaunch
    Zero Sugar Starbucks Double Shot Energy beveragelaunch
    Blended Refreshersupdate
    Unicorn Frappuccinoupdate
    Orange Cream beverageslaunch
    Pumpkin Spice Latteupdate
    Peppermint Mochaupdate

    Deals & partnerships

    1
    China retail businessTransition of Starbucks retail operations in China to a licensed business model.

    Starbucks retail operations in China were deconsolidated from financials in Q3 FY26. This transition is the main driver of year-over-year changes in the International segment. The JV is expected to reinvigorate sustainable growth in China.

    Risks & headwinds

    4
    Impact of China retail business transitionQ3 FY26 and ongoing

    Consolidated net revenues down 1% YoY; International segment reporting changes.

    Mitigation: Transition to a capital-light license structure; expectation for JV economics to build over time and reach 20,000 coffee houses.

    Underperforming Coffee Houses in North AmericaOngoing, particularly through FY27

    41 net closures within licensed portfolio in Q3 FY26; potential for additional closures.

    Mitigation: Assessing portfolio to ensure a healthy foundation; building a stronger U.S. development pipeline with new prototypes; redirecting resources to uplift program.

    Coffee cost headwindQ3 FY26, easing in Q4 FY26

    Impact was lower than the first 2 quarters of FY26.

    Mitigation: Expected to continue easing in Q4 FY26 and become largely immaterial to year-over-year margin comparisons.

    Variability in the broader consumer landscapeQ4 FY26 and ongoing

    Continued pressure on U.S. consumer sentiment.

    Mitigation: Focus on brand affinity, value, and innovation; broad-based sales growth across generations and income groups; strong Starbucks Rewards engagement.

    What to watch in Q4 FY26

    5

    U.S. comparable sales growth

    next quarter
    Current7.9% (Q3 FY26)
    Target6.5% or better (Q4 FY26)

    Why it matters

    This is a key indicator of continued momentum in the largest market and will validate the raised full-year guidance.

    With 1 quarter left in the year, we expect our fourth quarter comp growth in the U.S. to be 6.5% or better.

    Q&A highlights

    6

    How long can Starbucks sustain its current same-store sales momentum, and what are the building blocks to exceed the 3% long-term target?

    Brian Niccol attributed momentum to improved operating practices, Green Apron Service, better staffing, and consistent customer experiences. He noted significant room for transaction growth in both morning and afternoon dayparts, supported by relevant innovation in drinks, food, and merchandise. He expressed optimism for continued growth beyond current levels.

    “I still think there is more to come on the innovation side of things, whether it's through our digital platforms or more of the traditional work that we've done on menu and marketing.”

    asked by David Tarantino · answered by Brian Niccol

    2 min read6 chapters

    Detailed Narrative

    01

    Back to Starbucks Plan Driving Performance

    The company's 'Back to Starbucks' plan is yielding positive results, with Q3 FY26 marking the fourth consecutive quarter of positive global comparable sales and the second consecutive quarter of consolidated margin growth. This progress is attributed to improved operating practices, better staffing, and consistent execution of the Green Apron Service model. Management emphasized that the plan is ahead of schedule and is building a foundation for consistent, durable performance.

    02

    Operational Excellence and Partner Investment

    Starbucks continues to fine-tune Coffee House operations, with Green Apron Service serving as the operating foundation. Two-thirds of North American company-operated coffee houses are now at 4 or more shots up in the Grow Coffee House ranking system, a 5-point improvement quarter-over-quarter. Food availability rates improved to nearly 99%, up 10 points year-over-year. Coffee House leadership stability also improved, with the percentage of North American leaders in role for 2+ years up 7 points year-over-year. The company launched the 'Best of Starbucks Reward' incentive, offering eligible partners up to $300 per quarter for meeting performance goals.

    03

    Brand Relevance and Digital Engagement

    Brand affinity, consideration, and purchase intent reached 5-year highs in Q3, with sales growth broad-based across generations and income groups. Refreshers remained a standout platform, delivering double-digit year-over-year revenue growth in the U.S. The Starbucks Rewards program now has 35.8 million 90-day active members in the U.S., with new features like 'Pre-mod Monday' driving engagement. The marketing team is focused on cultural relevance and effective spending, with marketing spend at slightly over 2% of sales.

    04

    Coffee House Uplifts and Footprint Strategy

    The Coffee House uplift program surpassed 1,000 total uplifts across North America, achieving the FY26 goal ahead of plan. Early data shows transaction lift across all access points, dayparts, and formats, proving a strong brand halo. The company plans to accelerate to at least 1,500 uplifts by FY26 year-end and further in FY27. While net new company-operated unit growth in North America may be modest through FY27 due to redirecting resources and addressing underperforming stores, international expansion remains a key contributor to unit growth.

    05

    International Strategy and China JV Transition

    Starbucks is positioning itself as a world-class global licensor, with about 90% of its international portfolio now managed through a license structure following the China retail business transition to a new joint venture. This capital-light model allows for disciplined scaling through local partnerships. The China JV contributed $53 million in net revenues to the international P&L with an operating margin above 100% in Q3, and the company expects economics to build over time⏳, with a long-term ambition of 20,000 coffee houses in China.

    06

    Supply Chain and Technology Modernization

    Supply chain efforts are improving product availability and reliability, with expanded daily delivery and testing of a 24-hour operating clock aimed at enabling replenishment within 24 hours. Fiscal 2027 will be a significant year for technology modernization, introducing new inventory ordering, staffing and scheduling, and point-of-sale systems to enhance execution and simplify Coffee House operations.

    AI-generated summary of the company’s earnings call. Not investment advice.