Key points for investors:
- Q3 results: total net revenue $9.5 billion (up 3% year-over-year), global comparable store sales declined ~2%, EPS $0.50, global operating margin 10.1%. Company opened ~308 net new stores in Q3 and reported ~4% net new store growth (YoY).
- Regional performance: U.S. comps down ~2% (transactions down <4%); Canada showed low-single-digit comps; International delivered record quarterly revenue (quarterly revenue > $2B) with China comps +2% and transaction growth +6%. Channel Development grew ~10% driven by the Global Coffee Alliance.
- Strategy & operations: Management is executing the “Back to Starbucks” turnaround focused on (1) operational fixes in coffeehouses, (2) transforming the store portfolio (uplifts, lower-cost prototypes, sunsetting pickup-only format), and (3) a wave of innovation in 2026 (menu, digital, reimagined Rewards).
- Green Apron Service & SmartQ: Pilot results were positive — improved transactions, faster in-cafe service and drive-thru times (many cafe/drive-thru peak times now under the company's targets), and double-digit improvement where SmartQ was deployed. Full US rollout accelerated starting mid-August.
- Investments and near-term margin impact: Starbucks will invest meaningfully in people and operations, including ~ $0.5 billion of additional labor hours in U.S. company-operated stores over the next year to support Green Apron Service. Q3 margins contracted (operating margin down ~650 bps YoY) due to deleverage and investments (including Leadership Experience 2025). Management expects these to pressure near-term margins but believes they will drive stronger top-line and sustainable long-term margins.
- Innovation roadmap: Product and loyalty innovations planned for 2026 include protein cold foam (late Q4 test), redesigned baked case and a new 1971 dark roast on the Clover Vertica, global flavor platforms, customizable energy products, and significant Rewards program changes and app/MOP enhancements.
- China: Active evaluation of strategic partnership options ( >20 interested parties); Starbucks intends to retain a meaningful stake and will only pursue transactions that make strategic sense.
- Capital allocation & timing: Focus on disciplined capital deployment, maintaining investment-grade ratings and returning cash via dividends. An Investor Day is planned for Q2 FY2026 to provide longer-term detail and financial targets.
- Risks & uncertainties: Short-term consumer environment uncertainty; lapping prior-year promotional activity that has pressured transactions; coffee prices and tariff dynamics (green coffee cost increases expected to peak in 1H FY2026 due to hedging timing). Management emphasizes multi-year turnaround and the need for both operational and sales recovery to restore margins.
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