STARBUCKS CORP
For the period ended Jun 28, 2026. Filed Jul 29, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 28, 2026 · Filed Jul 29, 2026
SBUX$105.41-0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-29; filed 2026-04-28.
0000829224-26-000080
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-28; filed 2026-07-29.
0000829224-26-000130
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 148 previous paragraphs and 164 current paragraphs.
74 unchanged; 50 reworded; 37 added; 23 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
Restructuring
Current report
In the third quarter of fiscal 2026, we announced an additional fiscal 2026 restructuring plan focused on further transformation of our global support organization and non-retail facilities, as well as reducing the future operational complexity of our Starbucks Reserve and Roastery locations resulting in a reassessment and impairment of the associated asset group. Under the plan, the Company expects to capture cost savings through a more streamlined support structure, and a simplified operating model for Starbucks Reserve and Roastery locations.
Current report
Strategic Initiatives
Current report
As our international business shifts toward a more predominantly licensed model, we will continue evolving how we support our licensed business partners. We expect our international business to be a meaningful contributor to coffeehouse growth over time, supported by our licensed business model and significant opportunities for development in markets globally. We will apply continued discipline to how we grow our global footprint, with a focus on ensuring new coffeehouses meet our expectations for returns and long-term growth.
Current report
Company-operated stores revenue decreased $306 million, primarily driven by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($776 million) and unfavorable foreign currency impacts ($52 million). This was partially offset by a 7.9% increase in comparable store sales ($524 million) attributable to a 4.2% increase in comparable transactions and a 3.5% increase in average ticket.
Current report
Other revenues increased $78 million, primarily due to an increase in revenue in the Global Coffee Alliance ($89 million).
Current report
Company-operated stores revenue increased $628 million, primarily driven by a 5.9% increase in comparable store sales ($1.2 billion) attributable to a 3.6% increase in comparable transactions and a 2.3% increase in average ticket. This was partially offset by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($729 million).
Current report
Other revenues increased $364 million, primarily due to an increase in revenue in the Global Coffee Alliance ($311 million).
Current report
Product and distribution costs as a percentage of total net revenues decreased 100 basis points for the third quarter of fiscal 2026, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 (approximately 130 basis points), lower inflation paired with tariff refunds (approximately 80 basis points), partially offset by mix shift (approximately 110 basis points).
Current report
General and administrative expenses decreased $78 million, primarily due to lapping of the Leadership Experience 2025 ($81 million), restructuring-related savings ($63 million), and the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($42 million). This was partially offset by increases in performance-based compensation ($79 million) and transaction-related expenses related to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($44 million).
Current report
Restructuring and impairments increased $282 million, largely due to costs associated with the impairment of Starbucks Reserve and Roastery store locations, and partner severance costs. See Note 17, Restructuring and Impairments, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for further discussion.
Current report
General and administrative expenses decreased $120 million, largely due to restructuring-related savings ($174 million) and lapping of the Leadership Experience 2025 ($81 million) and the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($42 million). This was partially offset by increases in performance-based compensation ($112 million) and transaction-related expenses related to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($74 million).
Current report
Restructuring and impairments increased $279 million, largely due to costs associated with the impairment of Starbucks Reserve and Roastery store locations, and partner severance costs. See Note 17, Restructuring and Impairments, to the consolidated financial statements included in Item 1 of Part I of this 10-Q, for further discussion.
Current report
Income from equity investees increased $27 million, primarily due to income from our China joint venture, which was formed upon the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
Current report
Net gain resulting from divestiture of certain operations was $536.3 million, due to the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026.
Current report
Interest expense decreased $8 million, primarily due to reduced debt balances in the current year.
Current report
The effective tax rate for the quarter ended June 28, 2026, was 26.4% compared to 31.8% for the same period in fiscal 2025. The decrease was primarily due to lapping the discrete impact of changes in indefinite reinvestment assertions for certain foreign entities in the third quarter of fiscal 2025 (approximately 850 basis points), partially offset by impacts resulting from the divestiture of Starbucks retail operations in China in the third quarter of fiscal 2026 (370 basis points).
Current report
Net gain resulting from divestiture of certain operations was $536.3 million, due to the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026.
Current report
Interest income and other, net increased $6 million, primarily due to higher cash balances and interest rates in the current year.
Current report
North America operating income for the third quarter of fiscal 2026 increased 10% to $1.0 billion, compared to $919 million in the third quarter of fiscal 2025. Operating margin expanded 30 basis points to 13.6%, primarily driven by sales leverage (approximately 340 basis points), lapping of the Leadership Experience 2025 (approximately 120 basis points), and lower inflation paired with tariff refunds (approximately 110 basis points). This was partially offset by higher restructuring costs (approximately 240 basis points), labor investments largely in support of “Back to Starbucks” (approximately 190 basis points) and product mix shift (approximately 100 basis points).
Current report
International total net revenues for the third quarter of fiscal 2026 decreased $688 million, or 34%, primarily driven by lower company-operated store revenues following the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($780 million). This decrease was partially offset by higher product sales to, and royalty revenues from, our newly-formed China joint venture ($53 million) and other licensees ($50 million).
Current report
International operating income for the third quarter of fiscal 2026 decreased 7% to $253 million, compared to $273 million in the third quarter of fiscal 2025. Operating margin expanded 550 basis points to 19.1%, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 (approximately 800 basis points). This was partially offset by higher restructuring costs (approximately 290 basis points).
Current report
International total net revenues for the first three quarters of fiscal 2026 decreased $311 million, or 5%, primarily driven by lower company-operated store revenues following the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($730 million). This decline was partially offset by higher product sales to, and royalty revenues from, existing licensees ($182 million) and our newly-formed China joint venture ($53 million) and an increase in company-operated stores revenue due to a 4.3% increase in comparable store sales ($146 million), driven by a 2.5% increase in comparable transactions and a 1.7% increase in average ticket.
Current report
International operating income for the first three quarters of fiscal 2026 increased 29% to $934 million, compared to $727 million in the first three quarters of fiscal 2025. Operating margin expanded 460 basis points to 17.2%, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 (approximately 350 basis points) and lower store operating and depreciation and amortization costs after classifying assets for Starbucks retail operations in China as held for sale in the first and second quarters of fiscal 2026 (approximately 280 basis points), partially offset by higher restructuring costs (approximately 140 basis points).
Current report
Corporate and Other operating loss increased 24% to $588 million for the third quarter of fiscal 2026 compared to $474 million for the third quarter of fiscal 2025, primarily due to higher restructuring costs in support of our “Back to Starbucks” strategy ($73 million), performance-based compensation ($58 million) and transaction-related expenses for the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($44 million). The increases are partially offset by restructuring-related savings ($53 million).
Current report
Corporate and Other operating loss increased $6 million during the first three quarters of fiscal 2026 compared to the first three quarters of fiscal 2025, primarily due to performance-based compensation ($78 million), transaction-related expenses for the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($68 million) and higher restructuring costs in support of our “Back to Starbucks” strategy ($11 million). The increases are offset by restructuring-related savings ($164 million).
Current report
(3)Includes the conversion of 7,991 company-operated stores to licensed stores following the the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
Current report
Long-term Debt
Current report
In May 2026, the Company completed cash tender offers for certain series of its senior notes and repurchased approximately $1.3 billion aggregate principal amount of such notes using cash proceeds from the divestiture of Starbucks retail operations in China. The notes repurchased consisted of:
Current report
•$273.5 million of the $750.0 million, 4.500% Senior Notes (the “May 2028 notes”)
Current report
•$321.8 million of the $500.0 million, 4.800% Senior Notes (the “May 2030 notes”)
Current report
•$110.4 million of the $500.0 million, 5.000% Senior Notes (the “February 2034 notes”)
Current report
•$410.2 million of the $500.0 million, 5.400% Senior Notes (the “May 2035 notes”)
Current report
•$200.0 million of the $1.0 billion, 4.500% Senior Notes (the “November 2048 notes”)
Current report
In connection with the redemptions, the Company recognized an immaterial gain on partial extinguishment of debt for the quarter ended June 28, 2026, which is included in Interest income and other, net in the consolidated statement of earnings. In determining the value of the gain, the Company expensed the proportional amount of the related unamortized discount, premium, and debt issuance costs attributable to the repurchased notes.
Current report
Cash provided by operating activities was $3.6 billion for the first three quarters of fiscal 2026, compared to $3.4 billion for the same period in fiscal 2025. The increase of $238.4 million was primarily due to higher net earnings of $125.5 million and favorable changes in working capital.
Current report
Cash used in financing activities for the first three quarters of fiscal 2026 totaled $4.9 billion, compared to $0.4 billion for the same period in fiscal 2025. The $4.6 billion increase in cash used was primarily due to $2.8 billion in long-term debt repayments funded in part by proceeds from the divestiture of Starbucks retail operations in China, combined with the absence of new debt issuances in fiscal 2026 compared to the $1.7 billion raised in fiscal 2025.
Removed paragraphs (23)
Previous report
During the first quarter of fiscal 2026, we classified the assets and liabilities of the disposal group as held for sale on the consolidated balance sheets and the disposal group remained classified as held for sale as of March 29, 2026. The classification required us to cease property, plant, and equipment depreciation and operating lease ROU asset amortization of the related long-lived assets, resulting in reduced depreciation and amortization and store operating expenses, which were reflected through the close of the transaction. We also changed our indefinite reinvestment assertions upon classification as held for sale resulting in an increase in our income tax expense.
Previous report
Company-operated stores revenue increased $531 million, primarily driven by a 6.2% increase in comparable store sales ($433 million) attributable to a 3.8% increase in comparable transactions and a 2.3% increase in average ticket. Also contributing to the overall increase in company-operated stores revenue were incremental revenues from 52 net-new company-operated stores over the past 12 months ($50 million).
Previous report
Other revenues increased $166 million, primarily due to an increase in revenue in the Global Coffee Alliance ($149 million).
Previous report
Company-operated stores revenue increased $934 million, primarily driven by a 5.0% increase in comparable store sales ($726 million) attributable to a 3.3% increase in comparable transactions and a 1.7% increase in average ticket. Also contributing to the overall increase in company-operated stores revenue were incremental revenues from 52 net-new company-operated stores over the past 12 months ($149 million).
Previous report
Other revenues increased $286 million, primarily due to an increase in revenue in the Global Coffee Alliance ($222 million) and increased sales of cocoa butter to third parties ($34 million).
Previous report
Product and distribution costs as a percentage of total net revenues increased 250 basis points for the second quarter of fiscal 2026, largely due to mix shift (90 basis points) and inflationary pressures (approximately 90 basis points), primarily driven by elevated coffee pricing and tariffs.
Previous report
General and administrative expenses decreased $14 million, primarily due to restructuring-related savings ($44 million), partially offset by increases in performance-based compensation ($27 million).
Previous report
Restructuring and impairments decreased $91 million, largely due to lapping costs associated with the simplification of our support organization in the prior year. See Note 17, Restructuring, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for further discussion.
Previous report
Income from equity investees decreased $8 million, primarily due to income from our North American Coffee Partnership joint venture.
Previous report
General and administrative expenses decreased $41 million, largely due to restructuring-related savings ($111 million), partially offset by increases in performance-based compensation ($27 million) and transaction-related expenses related to the strategic partnership with Boyu Capital to operate Starbucks retail in China ($30 million).
Previous report
Restructuring and impairments decreased $3 million, largely due to lapping costs associated with the simplification of our support organization in the prior year, partially offset by costs associated with the closure of coffeehouses in the current year. See Note 17, Restructuring, to the consolidated financial statements included in Item 1 of Part I of this 10-Q, for further discussion.
Previous report
Interest income and other, net increased $9 million, primarily due to favorable investment performance.
Previous report
The effective tax rate for the quarter ended March 29, 2026, was 29.8% compared to 23.5% for the same period in fiscal 2025. The increase was primarily due to the impact of reorganizing certain entities in China (approximately 280 basis points), the $8 million discrete increase to the change in indefinite reinvestment assertions as a result of classifying the Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 (approximately 110 basis points), and the effect of higher pre-tax earnings and the proportionate impacts from certain permanent differences and discrete items.
Previous report
Interest expense increased $22 million, primarily due to higher interest rates on refinanced long-term debt in the current year and reduced savings from cross-currency interest rate hedging.
Previous report
North America operating income for the second quarter of fiscal 2026 decreased 9% to $680 million, compared to $748 million in the second quarter of fiscal 2025. Operating margin contracted 170 basis points to 10%, primarily driven by labor investments largely in support of “Back to Starbucks,” (approximately 260 basis points), product mix shift (90 basis points) and inflationary pressures (approximately 90 basis points), primarily driven by tariffs and elevated coffee pricing, partially offset by sales leverage (370 basis points).
Previous report
International total net revenues for the second quarter of fiscal 2026 increased $184 million, or 10%, primarily driven by higher product sales to, and royalty revenues from, our licensees ($74 million), primarily due to the opening of 321 net-new licensed stores over the past 12 months. Additional contributing factors were favorable foreign currency translation impacts ($40 million), an increase in company-operated stores revenue due to a 2.6% increase in comparable store sales ($37 million), driven by a 2.1% increase in comparable transactions and a 0.5% increase in average ticket, and net-new company-operated store growth of 3%, or 261 stores, over the past 12 months ($35 million).
Previous report
International operating income for the second quarter of fiscal 2026 increased 84% to $399 million, compared to $217 million in the second quarter of fiscal 2025. Operating margin expanded 780 basis points to 19%, primarily due to lower store operating and depreciation and amortization costs after classifying assets for Starbucks retail operations in China as held for sale (approximately 520 basis points), and sales leverage (430 basis points), partially offset by inflationary pressures (approximately 120 basis points), primarily driven by elevated coffee pricing.
Previous report
International total net revenues for the first two quarters of fiscal 2026 increased $378 million, or 10%, primarily driven by higher product sales to, and royalty revenues from, our licensees ($132 million), primarily due to the opening of 321 net-new licensed stores over the past 12 months. Also contributing was an increase in company-operated stores revenue due to a 3.9% increase in comparable store sales ($108 million), driven by a 2.5% increase in comparable transactions and a 1.4% increase in average ticket, as well as net-new company-operated store growth of 3%, or 261 stores, over the past 12 months ($85 million), and favorable foreign currency translation impacts ($51 million).
Previous report
International operating income for the first two quarters of fiscal 2026 increased 50% to $681 million, compared to $454 million in the first two quarters of fiscal 2025. Operating margin expanded 450 basis points to 17%, primarily due to sales leverage (420 basis points) and lower store operating and depreciation and amortization costs after classifying assets for Starbucks retail operations in China as held for sale (approximately 340 basis points), partially offset by inflationary pressures (approximately 160 basis points), primarily driven by elevated coffee pricing, and restructuring costs associated with the closure of coffeehouses (approximately 90 basis points).
Previous report
Corporate and Other operating loss decreased 14% to $480 million for the second quarter of fiscal 2026 compared to $558 million for the second quarter of fiscal 2025, primarily due to lower costs associated with restructuring our support organization ($66 million), primarily severance costs, in support of our “Back to Starbucks” strategy.
Previous report
Corporate and Other operating loss decreased 10% to $955 million for the first two quarters of fiscal 2026 compared to $1.1 billion for the first two quarters of fiscal 2025, primarily due to restructuring-related savings in the current year ($111 million) and lower costs associated with restructuring our support organization ($62 million), primarily severance costs, in support of our “Back to Starbucks” strategy, partially offset by transaction-related expenses for the strategic partnership with Boyu Capital to operate Starbucks retail in China ($24 million) and increases in performance-based compensation ($20 million).
Previous report
Cash provided by operating activities was $2.0 billion for the first two quarters of fiscal 2026, compared to $2.4 billion for the same period in fiscal 2025. The change was primarily due to a decrease in cash flow of $380.8 million in Accounts Payable, which was primarily driven by payment timing, and a decrease in net earnings of $361.1 million. These impacts were partially offset by a net increase in cash flow of $375.4 million in deferred income taxes primarily related to the change in indefinite reinvestment assertion as a result of classifying our Starbucks retail operations in China as held for sale.
Previous report
Cash used in financing activities for the first two quarters of fiscal 2026 totaled $2.4 billion, compared to $1.4 billion for the same period in fiscal 2025. The change was primarily due to a $1.0 billion repayment of long-term debt in the current year.
Reworded paragraphs (50)
Previous wording
• the costs and risks associated with, and the successful and timely execution and effects of, our existing and any future business opportunities, expansions, initiatives, strategies, investments, and plans, including our“Back to Starbucks” strategy and our restructuring plan;
Current wording
• the costs and risks associated with, and the successful and timely execution and effects of, our existing and any future business opportunities, expansions, initiatives, strategies, investments, transformation efforts, and plans, including our“Back to Starbucks” strategy and our restructuring plans;
Previous wording
• inherent risks of operating a global business, including changing conditions in our markets; local factors affecting store openings; protectionist trade or foreign investment policies, such as tariffs and import/export regulations; economic or trade sanctions; compliance with local laws and other regulations; and local labor policies and conditions, including labor strikes and work stoppages;
Current wording
• inherent risks of operating a global business, including changing conditions in our markets; local factors affecting store openings; protectionist trade or foreign investment policies, including trade restrictions, tariffs, quotas, import/export regulations, customs restrictions, sanctions, countersanctions, and retaliatory measures; compliance with local laws and other regulations; and local labor policies and conditions, including labor strikes and work stoppages;
Previous wording
• higher costs, lower quality, or unavailability of coffee, dairy, cocoa, energy, water, raw materials, or product ingredients and related volatility;
Current wording
• higher costs, lower quality, or unavailability of coffee, dairy, cocoa, energy, water, raw materials, packaging, or product ingredients and related volatility;
Previous wording
• evolving corporate governance and public disclosure regulations and expectations;
Current wording
• evolving corporate governance and public disclosure regulations and expectations, including with respect to sustainability matters;
Previous wording
• failure to comply with applicable laws and complex and changing legal and regulatory requirements, including in privacy and data protection;
Current wording
• failure to comply with applicable laws and complex and changing legal and regulatory requirements, including those governing privacy, data protection, artificial intelligence, and other emerging technologies;
Previous wording
• the unauthorized access, use, theft, or destruction of our data, or of our proprietary or confidential information and the impact thereof;
Current wording
• the unauthorized access, use, theft, or destruction of our data, or of our proprietary or confidential information, including as a result of increasingly sophisticated threats enabled or accelerated by artificial intelligence, and the impact thereof;
Previous wording
• potential negative effects of, and our ability to respond to, a material failure, inadequacy, or interruption of our information technology systems or those of our third-party business partners or service providers, or failure to comply with data protection laws; and
Current wording
• potential negative effects of, and our ability to respond to, a material failure, inadequacy, or interruption of our information technology systems or digital platforms, or those of our third-party business partners or service providers, or failure to comply with data protection laws; and
Previous wording
Starbucks results for the second quarter of fiscal 2026 showed continued progress and momentum on key “Back to Starbucks” initiatives, as demonstrated through meaningful revenue growth. These investments included the Green Apron Service standard to improve the coffeehouse experience, engaging consumer marketing, disciplined menu innovation, and a redesigned Starbucks Rewards program, all of which deliver greater connection, consistency, and value for customers. During the second quarter of fiscal 2026, consolidated net revenues increased 9% to $9.5 billion compared to $8.8 billion in the second quarter of fiscal 2025, primarily due to a 6.2% increase in global comparable store sales, driven by a 7.1% increase in the U.S. market and a 2.6% increase internationally. Also contributing to the increase was higher revenues from the Global Coffee Alliance and our licensed store business. Specific to the U.S. market, the increase in comparable store sales was driven by a 4.3% increase in comparable transactions and a 2.7% increase in average ticket, primarily driven by higher delivery sales in the current year. Consolidated operating margin expanded 180 basis points from the prior year to 8.7%, primarily driven by sales leverage and lower store operating and depreciation and amortization costs after classifying assets for Starbucks retail operations in China as held for sale, partially offset by labor investments largely in support of “Back to Starbucks.”
Current wording
Starbucks results for the third quarter of fiscal 2026 showed continued progress and momentum on key “Back to Starbucks” initiatives, as demonstrated through continued global comparable store sales growth, consolidated operating margin expansion, and improved customer engagement. These initiatives included the Green Apron Service standard to improve operational consistency and the coffeehouse experience, engaging consumer marketing, disciplined menu innovation, a redesigned Starbucks Rewards program, and coffeehouse uplifts, all of which are intended to deliver greater connection, consistency, and value for customers. During the third quarter of fiscal 2026, consolidated net revenues decreased 1% to $9.3 billion compared to $9.5 billion in the third quarter of fiscal 2025, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026. The decline in consolidated revenues was offset by a 7.9% increase in global comparable store sales, driven by a 7.9% increase in the U.S. market. Also contributing to the offset was higher revenues from our international licensed store business. Specific to the U.S. market, the increase in comparable store sales was driven by a 4.2% increase in comparable transactions and a 3.6% increase in average ticket, primarily driven by higher delivery sales and strength in customer food attach and beverage modifications. Consolidated operating margin expanded 60 basis points from the prior year to 10.5%, primarily driven by sales leverage and lower inflation paired with tariff refunds, offset by higher restructuring costs and labor investments largely in support of “Back to Starbucks.”
Previous wording
In November, we announced that the Company entered into an agreement to form a joint venture with Boyu Capital to operate Starbucks retail in China (the “disposal group”), marking a significant milestone in the Company’s long-term strategy to unlock sustainable, disciplined growth in one of the Company’s critical growth markets.
Current wording
In the first quarter of fiscal 2026, we announced that the Company entered into an agreement to form a joint venture with Boyu Capital to operate Starbucks retail in China (the “disposal group”), marking a significant milestone in the Company’s long-term strategy to unlock sustainable, disciplined growth in one of the Company’s critical growth markets.
Previous wording
Further, Starbucks and Boyu Capital transitioned into the operational phase of the joint venture, with a focus on expansion, innovation, and delivering exceptional coffee and welcoming experiences to customers across China. We transitioned from recording revenues and expenses of the disposal group to recording our share of income from the joint venture, recognized as income from equity investees under the equity method of accounting. This transition will result in lower revenues and higher operating margin for Starbucks beginning in the third quarter of fiscal 2026, as compared to the historical, company-operated model. The disposal group was deconsolidated from our financial statements and will be reported as part of our licensed portfolio in the third quarter.
Current wording
In the third quarter of fiscal 2026, the transaction closed, and under the terms of the agreement, funds managed by Boyu Capital acquired a 60% stake in Starbucks China retail operations, while Starbucks retained a 40% ownership interest and continues to own and license the brand and intellectual property to the joint venture. The disposal group was deconsolidated from our financial statements and we transitioned from recording revenues and expenses of the disposal group to recording our share of income from the joint venture, recognized as income from equity investees under the equity method of accounting. We expect that the conversion to our licensed joint venture model will continue to drive lower revenues and higher operating margin for Starbucks, as compared to the historical, company-operated model.
Previous wording
We currently plan to use our transaction proceeds for debt reduction, strengthening our balance sheet and allowing us to execute our long-term growth strategy with greater financial flexibility. By bringing together the trusted Starbucks brand, and Boyu Capital’s deep local expertise, we believe we will be able to serve more customers, enter more cities, strengthen profitability, and better compete in China’s dynamic and evolving market.
Current wording
We used a portion of our transaction proceeds for debt reduction, strengthening our balance sheet and allowing us to execute our long-term growth strategy with greater financial flexibility. The joint venture is expected to reinvigorate sustainable growth in China through a focus on expansion, innovation and elevated customer experiences, with a shared long-term aspiration to grow to as many as 20,000 locations in China over time. By bringing together the trusted Starbucks brand, and Boyu Capital’s deep local expertise, we believe we will be able to serve more customers, enter more cities, strengthen profitability, and better compete in China’s dynamic and evolving market.
Previous wording
In support of our “Back to Starbucks” strategy, as part of the restructuring plan announced in the fourth quarter of fiscal 2025, we continued to close stores that did not demonstrate a viable path to profitability or meet our standards of delivering a warm, welcoming space for our customers and partners. Those store closures in North America were substantially completed in fiscal 2025, and the majority of those International store closures were completed in the first quarter of fiscal 2026. With a healthier base of coffeehouses, we expect meaningful opportunity for disciplined growth. We anticipate that these actions, along with our simplified broader support organization, will allow us to restructure, redeploy, and refocus our resources on priorities that we believe will deliver long-term sustainable business growth.
Current wording
In support of our “Back to Starbucks” strategy, as part of the restructuring plan announced in the fourth quarter of fiscal 2025, we closed stores that did not demonstrate a viable path to profitability or meet our standards of delivering a warm, welcoming space for our customers and partners. Those store closures in North America were substantially completed in fiscal 2025, and the majority of those International store closures were completed in the first quarter of fiscal 2026.
Previous wording
As the fiscal year progresses, we will continue to refine and execute our “Back to Starbucks” initiatives to continue topline momentum and build sales leverage while investing in our cafes and customer experience, delivering seamless digital experiences, strengthening our supply chain, and enabling technological efficiencies. We will continue to amplify our brand, engaging with our customers authentically and distinctly as Starbucks, through broad-based marketing, with the goal of deepening brand loyalty and affinity. As our international business shifts toward a more predominantly licensed model, we will look toward strengthening how we support our licensed business partners. Our approach will strive to bring decision-making closer to customers and local markets, while enabling us to focus on establishing standards and best practices. We expect certain macroeconomic pressures to alleviate in the second half of the fiscal year, including impacts on product and distribution costs from tariffs and elevated coffee pricing. While we believe we are making the right strategic investments to improve our operating foundations, our focus going forward will be on driving consistency at scale while balancing and maintaining a healthier cost structure. We will continue to test, learn, and refine our approach to deliver the best of Starbucks to drive durable, profitable, long-term growth.
Current wording
As the fiscal year progresses, we will continue to refine and execute our “Back to Starbucks” initiatives to drive topline momentum and build sales leverage while investing in our cafes and customer experience, with a focus on delivering exceptional service with speed, providing seamless digital experiences, strengthening our supply chain, and enabling technological efficiencies. We will continue to amplify our brand, engaging with our customers authentically and distinctly as Starbucks, through broad-based marketing, menu innovation, and Starbucks Rewards engagement, with the goal of deepening customer connection, brand loyalty and affinity.
Previous wording
Total net revenues for the second quarter of fiscal 2026 increased $770 million, primarily due to higher revenues from company-operated stores ($531 million) and other revenues ($166 million).
Current wording
Total net revenues for the third quarter of fiscal 2026 decreased $133 million, primarily due to lower revenues from company-operated stores ($306 million) partially offset by higher licensed stores ($95 million) and other revenues ($78 million).
Previous wording
Licensed stores revenue increased $72 million, primarily driven by higher product sales to, and royalty revenues from, our licensees ($86 million), partially offset by lower equipment sales to licensees ($15 million).
Current wording
Licensed stores revenue increased $95 million, primarily driven by higher product sales to, and royalty revenues from, our existing licensees ($58 million) and our newly-formed China joint venture ($53 million) following the conversion of Starbucks retail operations in China to our licensed joint venture model, partially offset by lower equipment sales to licensees ($16 million).
Previous wording
Total net revenues for the first two quarters of fiscal 2026 increased $1.3 billion, primarily due to higher revenues from company-operated stores ($934 million) and other revenues ($286 million).
Current wording
Total net revenues for the first three quarters of fiscal 2026 increased $1.2 billion, primarily due to higher revenues from company-operated stores ($628 million), other revenues ($364 million), and licensed stores ($162 million).
Previous wording
Licensed stores revenue increased $67 million, primarily driven by higher product sales to, and royalty revenues from, our licensees in our International segment ($132 million). The increase in licensed stores revenue was partially offset by lower equipment sales to our licensees globally ($36 million) and a decrease in product sales to, and royalty revenues from, our licensees in our North America segment ($29 million).
Current wording
Licensed stores revenue increased $162 million, primarily driven by higher product sales to, and royalty revenues from, our existing licensees in our International segment ($182 million) and our newly-formed China joint venture ($53 million) following the conversion of Starbucks retail operations in China to our licensed joint venture model. This was partially offset by lower equipment sales to our licensees globally ($52 million) and a decrease in product sales to, and royalty revenues from, our licensees in our North America segment ($21 million).
Previous wording
Store operating expenses as a percentage of total net revenues decreased 140 basis points for the second quarter of fiscal 2026. Store operating expenses as a percentage of company-operated stores revenue decreased 90 basis points, primarily due to sales leverage (330 basis points), partially offset by labor investments largely in support of “Back to Starbucks” (approximately 230 basis points).
Current wording
Store operating expenses as a percentage of total net revenues decreased 90 basis points for the third quarter of fiscal 2026. Store operating expenses as a percentage of company-operated stores revenue increased 30 basis points, primarily due to labor investments largely in support of “Back to Starbucks” (approximately 190 basis points), and increased reserves for self-insured claims (approximately 100 basis points), partially offset by sales leverage (approximately 250 basis points).
Previous wording
Other operating expenses decreased $8 million, primarily due to savings from simplifying our licensed business support organization ($16 million).
Current wording
Other operating expenses decreased $20 million, primarily due to savings from simplifying our licensed business support organization ($15 million).
Previous wording
Depreciation and amortization expenses as a percentage of total net revenues decreased 100 basis points, primarily as a result of ceasing depreciation upon classifying our Starbucks retail operations in China as held for sale.
Current wording
Depreciation and amortization expenses as a percentage of total net revenues decreased 60 basis points, primarily driven by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
Previous wording
Income from equity investees increased $6 million, primarily due to income from our North American Coffee Partnership joint venture.
Current wording
Income from equity investees increased $22 million, primarily due to income from our China joint venture, which was formed upon the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
Previous wording
The combination of these changes resulted in an overall increase in operating margin of 180 basis points for the second quarter of fiscal 2026.
Current wording
The combination of these changes resulted in an overall increase in operating margin of 60 basis points for the third quarter of fiscal 2026.
Previous wording
Product and distribution costs as a percentage of total net revenues increased 230 basis points for the first two quarters of fiscal 2026, largely due to inflationary pressures (approximately 120 basis points), primarily driven by elevated coffee pricing and tariffs, and mix shift (70 basis points).
Current wording
Product and distribution costs as a percentage of total net revenues increased 130 basis points for the first three quarters of fiscal 2026 largely due to mix shift (80 basis points).
Previous wording
Store operating expenses as a percentage of total net revenues was flat for the first two quarters of fiscal 2026. Store operating expenses as a percentage of company-operated stores revenue increased 40 basis points, primarily due to labor investments largely in support of “Back to Starbucks” (approximately 230 basis points), offset by sales leverage (approximately 240 basis points).
Current wording
Store operating expenses as a percentage of total net revenues decreased 40 basis points for the first three quarters of fiscal 2026. Store operating expenses as a percentage of company-operated stores revenue increased 40 basis points, primarily due to labor investments largely in support of “Back to Starbucks” (approximately 220 basis points), and increased reserves for self- insured claims (approximately 60 basis points), offset by sales leverage (approximately 300 basis points).
Previous wording
Other operating expenses decreased $30 million, primarily due to savings from simplifying our licensed business support organization ($31 million).
Current wording
Other operating expenses decreased $49 million, primarily due to savings from simplifying our licensed business support organization ($45 million).
Previous wording
Depreciation and amortization expenses as a percentage of total net revenues decreased 60 basis points, primarily as a result of ceasing depreciation upon classifying our Starbucks retail operations in China as held for sale.
Current wording
Depreciation and amortization expenses as a percentage of total net revenues decreased 60 basis points, primarily driven by ceasing depreciation upon classifying our Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 and converting Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.
Previous wording
The combination of these changes resulted in an overall decrease in operating margin of 70 basis points for the first two quarters of fiscal 2026.
Current wording
The combination of these changes resulted in an overall decrease in operating margin of 20 basis points for the first three quarters of fiscal 2026.
Previous wording
Interest income and other, net decreased $6 million, primarily due to non-core investment impairments.
Current wording
Interest income and other, net increased $12 million, primarily due to higher cash balances and interest rates in the current year, partially offset by non-core investment impairments.
Previous wording
Interest expense increased $10 million, primarily due to higher interest rates on refinanced long-term debt in the current year and reduced savings from cross-currency interest rate hedging.
Current wording
Interest expense increased $14 million, primarily due to reduced savings from cross-currency interest rate hedging, partially offset by reduced debt balances in the current year.
Previous wording
The effective tax rate for the two quarters ended March 29, 2026, was 46.1% compared to 23.6% for the same period in fiscal 2025. The increase was primarily due to the $273 million discrete impact of changes in indefinite reinvestment assertions as a result of classifying Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 (approximately 1,830 basis points), lapping the discrete impact of a tax status change for a certain foreign entity in the first quarter of fiscal 2025 (approximately 200 basis points), and the impact of reorganizing certain entities in China (approximately 130 basis points).
Current wording
The effective tax rate for the three quarters ended June 28, 2026, was 36.5% compared to 26.5% for the same period in fiscal 2025. The increase was primarily due to the $273 million discrete impact of changes in indefinite reinvestment assertions as a result of classifying Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 (approximately 640 basis points), impacts resulting from the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026 (approximately 240 basis points) and lapping the discrete impact of a tax status change for a certain foreign entity in the first quarter of fiscal 2025 (approximately 130 basis points).
Previous wording
North America total net revenues for the second quarter of fiscal 2026 increased $421 million, or 7%, primarily driven by an increase in company-operated stores revenue due to a 7.1% increase in comparable store sales ($396 million), driven by a 4.4% increase in comparable transactions and a 2.6% increase in average ticket, primarily due to higher delivery sales.
Current wording
North America total net revenues for the third quarter of fiscal 2026 increased $468 million, or 7%, primarily driven by an increase in company-operated stores revenue due to a 8.1% increase in comparable store sales ($486 million), driven by a 4.5% increase in comparable transactions and a 3.5% increase in average ticket, primarily due to higher delivery sales and strength in customer food attach and beverage modifications.
Previous wording
North America total net revenues for the first two quarters of fiscal 2026 increased $630 million, or 5%, primarily driven by an increase in company-operated stores revenue due to a 5.3% increase in comparable store sales ($618 million), driven by a 3.6% increase in comparable transactions and a 1.6% increase in average ticket, primarily due to higher delivery sales, and an increase in customer beverage modifications.
Current wording
North America total net revenues for the first three quarters of fiscal 2026 increased $1.1 billion, or 5%, primarily driven by an increase in company-operated stores revenue due to a 6.2% increase in comparable store sales ($1.1 billion), driven by a 3.9% increase in comparable transactions and a 2.3% increase in average ticket, primarily due to higher delivery sales, and strength in customer beverage modifications and food attach.
Previous wording
North America operating income for the first two quarters of fiscal 2026 decreased 20% to $1.5 billion, compared to $1.9 billion in the first two quarters of fiscal 2025. Operating margin contracted 330 basis points to 11%, primarily driven by labor investments largely in support of “Back to Starbucks” (approximately 260 basis points), inflationary pressures (approximately 120 basis points), primarily driven by tariffs and elevated coffee pricing, and product mix shift (40 basis points), partially offset by sales leverage (180 basis points).
Current wording
North America operating income for the first three quarters of fiscal 2026 decreased 10% to $2.6 billion, compared to $2.8 billion in the first three quarters of fiscal 2025. Operating margin contracted 210 basis points to 11.8%, primarily driven by labor investments largely in support of “Back to Starbucks” (approximately 240 basis points).
Previous wording
Channel Development total net revenues for the second quarter of fiscal 2026 increased $159 million, or 39%, primarily due to an increase in revenue in the Global Coffee Alliance ($149 million).
Current wording
Channel Development total net revenues for the third quarter of fiscal 2026 increased $104 million, or 22%, primarily due to an increase in revenue in the Global Coffee Alliance ($89 million).
Previous wording
Channel Development operating income for the second quarter of fiscal 2026 increased 19% to $230 million, compared to $194 million in the second quarter of fiscal 2025. Operating margin contracted 680 basis points to 41%, primarily driven by lower income from the North American Coffee Partnership joint venture relative to segment revenue growth (approximately 550 basis points) and other product mix shifts (160 basis points).
Current wording
Channel Development operating income for the third quarter of fiscal 2026 increased 40% to $306 million, compared to $218 million in the third quarter of fiscal 2025. Operating margin expanded 700 basis points to 52.1%, primarily driven by tariff impacts including refunds (approximately 1,370 basis points). This was partially offset by product mix shifts (approximately 470 basis points) and lower income from the North American Coffee Partnership joint venture relative to segment revenue growth (approximately 260 basis points).
Previous wording
Channel Development total net revenues for the first two quarters of fiscal 2026 increased $245 million, or 29%, primarily due to an increase in revenue in the Global Coffee Alliance ($222 million).
Current wording
Channel Development total net revenues for the first three quarters of fiscal 2026 increased $349 million, or 26%, primarily due to an increase in revenue in the Global Coffee Alliance ($311 million).
Previous wording
Channel Development operating income for the first two quarters of fiscal 2026 increased 11% to $446 million, compared to $402 million in the first two quarters of fiscal 2025. Operating margin contracted 660 basis points to 41%, primarily driven by product mix shifts (approximately 470 basis points) and lower North American Coffee Partnership joint venture income growth relative to segment revenue growth (230 basis points).
Current wording
Channel Development operating income for the first three quarters of fiscal 2026 increased 21% to $752 million, compared to $620 million in the first three quarters of fiscal 2025. Operating margin contracted 180 basis points to 44.8%, primarily driven by lower North American Coffee Partnership joint venture income growth relative to segment revenue growth (approximately 240 basis points).
Previous wording
(1)Includes 62 and 227 stores closed in the quarter and two quarters ended March 29, 2026, respectively, as part of our “Back to Starbucks” restructuring plan.
Current wording
(1)Includes 20 and 247 stores closed in the quarter and three quarters ended June 28, 2026, respectively, as part of our “Back to Starbucks” fourth quarter of fiscal 2025 restructuring plan.
Previous wording
Our cash and investments were $2.0 billion as of March 29, 2026, and $3.7 billion as of September 28, 2025. We actively manage our cash and investments in order to internally fund operating needs, make scheduled interest and principal payments on our borrowings, fund acquisitions, and return cash to shareholders through common stock cash dividend payments and share repurchases. Our investment portfolio primarily includes highly liquid available-for-sale securities, including corporate debt securities and U.S. government treasury securities. As of March 29, 2026, approximately $0.8 billion of cash and short-term investments were held in foreign subsidiaries, excluding cash balances for Starbucks retail operations in China that were classified as held for sale.
Current wording
Our cash and investments were $3.9 billion as of June 28, 2026, and $3.7 billion as of September 28, 2025. We actively manage our cash and investments in order to internally fund operating needs, make scheduled interest and principal payments on our borrowings, fund acquisitions, and return cash to shareholders through common stock cash dividend payments and share repurchases. Our investment portfolio primarily includes highly liquid available-for-sale securities, including corporate debt securities and U.S. government treasury securities. As of June 28, 2026, approximately $1.1 billion of cash and short-term investments were held in foreign subsidiaries.
Previous wording
Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $3.0 billion, with individual maturities that may vary but not exceed 397 days from the date of issue. Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our 2025 credit facility. The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures, and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock, and share repurchases. We had no borrowings outstanding under our commercial paper program as of March 29, 2026 and September 28, 2025. Our total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of our second quarter of fiscal 2026.
Current wording
Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $3.0 billion, with individual maturities that may vary but not exceed 397 days from the date of issue. Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our 2025 credit facility. The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures, and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock, and share repurchases. We had no borrowings outstanding under our commercial paper program as of June 28, 2026 and September 28, 2025. Our total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of our third quarter of fiscal 2026.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Divestiture of Starbucks Retail Operations in China
Current report — wording carried from elsewhere
We expect certain macroeconomic pressures to continue easing into the fourth quarter, including impacts on product and distribution costs from tariffs and elevated coffee pricing. While we believe we are making the right strategic investments to improve our operating foundations, our focus going forward will be on driving consistency at scale while balancing and maintaining a healthier cost structure. We will continue to test, learn, and refine our approach to deliver the best of Starbucks to drive durable, profitable, long-term growth.
Current report — wording carried from elsewhere
See Note 8, Debt, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for details of the components of our long-term debt.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
On March 30, 2026, in the third quarter of fiscal 2026, the transaction subsequently closed, and under the terms of the agreement, funds managed by Boyu Capital acquired a 60% stake in Starbucks China retail operations, while Starbucks retained a 40% ownership interest and continues to own and license the brand and intellectual property to the joint venture. The joint venture oversees 7,991 company-operated coffeehouses, which transitioned to a licensed operating model, with a shared long-term aspiration to grow to as many as 20,000 locations over time.