Starbucks comparable sales are back in the black (up 1%) after 7 quarters, but higher coffee prices and revamp costs squeeze profits

MILAN – Starbucks returned to growth on comparable basis after seven consecutive quarters of decline, closing with quarterly revenue of $9.569 billion, up 5.5% and exceeding consensus estimates of $9.35 billion. However, it missed expectations in terms of EPS (Non-GAAP), which stood at $0.52, against a consensus of $0.56 and down 3% compared to the fourth quarter of 2024.

The Seattle-based chain yesterday released its results for the fourth quarter, which ended on 28 September, as well as for the full 2025 financial year, marking a partial reversal of the trend. Extra staffing, improved service and new protein drinks helped sales.

“We’re a year into our ‘Back to Starbucks’ strategy, and it’s clear that our turnaround is taking hold,” said CEO Brian Niccol. “Our return to global comp growth and the momentum we’re building give me confidence we’re on the right path to deliver the very best of Starbucks for our customers, partners and shareholders.”

But these are just the first steps in a long journey of restructuring and relaunching. The chain itself has warned its turnaround would be a “multiyear” effort, and said it would provide a fuller financial outlook in January.

Starbucks suspended guidance shortly after Niccol took the helm in September 2024.

Comparable sales are up for the first time in 21 months, with a 1% increase compared to the fourth quarter of fiscal year 2024, exceeding the negative expectations of Wall Street analysts, who had predicted a further decline of 0.3%.

But the credit goes to international sales performance, which grew by 3% (+2% in China), since sales in North America and the United States – an extremely important metric for the company – remained flat (-2% in the third quarter).

During Starbucks’ earnings call, management said that for the company overall, the positive same-store sales trends had continued through October. The company expanded its restructuring efforts in September to close about 600 underperforming stores, 90% of which are in the United States, including its flagship Seattle roastery.

Starbucks also plans to invest more than half a billion dollars of additional labour hours into its U.S. company-operated stores over the next year.

Restaurant industry consultant John Gordon said his takeaway from the results is that Starbucks’ recovery will take “a lot longer” than Wall Street expected, given the contraction in operating margin.

The operating margin was at 2.9% in the fourth quarter down 1,150 bps from the equivalent period of 2024 and at 7.9% (down 710 bps) for the fiscal year. The operating income was down 78.7% for the quarter at US278.2 million and 45.7% in the full fiscal year at US$2,936.6 billion.

The hike in global green coffee prices, along with hefty duties on imported goods and the cost of the revamp, squeezed Starbucks’ margins.

Starbucks has been struggling as customers cut back on discretionary spending and competing coffee outlets battle for share in markets such as the US and China.

“Their (Starbucks) cost structure — with rent, labor, and coffee — is challenging. There are so many competitors, whether in coffee or other caffeinated drinks, that they don’t have the pricing power they used to.

At least management is realistic about the challenges ahead of them,” said Brian Jacobsen, chief economist at Annex Wealth Management.

US consumers are increasingly watchful about spending on dining out, as economic uncertainty and inflation squeeze budgets.

Niccol said that Starbucks would be judicious with price increases next year and said he did not expect any broad menu price hikes.

Below are the highlights of the company’s press release

Starbucks Corporation (Nasdaq: SBUX) today reported financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ended September 28, 2025. GAAP results in fiscal 2025 and fiscal 2024 include items that are excluded from non-GAAP results. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information.

Q4 Fiscal Year 2025 Highlights

• Global comparable store sales increased 1%, primarily driven by a 1% increase in comparable transactions
  • North America and U.S. comparable store sales were flat, driven by a 1% increase in average ticket, offset by a 1% decline in comparable transactions;
  • International comparable store sales increased 3%, driven by a 6% increase in comparable transactions, partially offset by a 3% decline in average ticket; China comparable store sales increased 2%, driven by a 9% increase in comparable transactions, partially offset by a 7% decline in average ticket
• The company had 107 net store closures in Q4, ending the period with 40,990 stores. This included 627 stores closed as part of our restructuring plan announced on September 25, 2025, of which over 90% were in North America.
  • At the end of Q4, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,864 and 8,011 stores in the U.S. and China, respectively
• Consolidated net revenues increased 5%, including on a constant currency basis, to $9.6 billion
• GAAP operating margin contracted 1,150 basis points year-over-year to 2.9%, primarily due to restructuring costs associated with the closure of coffeehouses (stores) and simplification of our support organization, inflation, investments in support of “Back to Starbucks”, which were largely in labor hours, and deleverage.
  • Non-GAAP operating margin contracted 500 basis points year-over-year, including on a constant currency basis, to 9.4%
• Effective tax rate of 18.8% compared to 23.8% in the prior year. The decrease was primarily driven by lower pre-tax earnings and the proportionate impacts from certain permanent differences and discrete items.
• GAAP earnings per share of $0.12 declined 85% over prior year
  • Non-GAAP earnings per share of $0.52 declined 35% over prior year, or 34% on a constant currency basis

Full Fiscal Year 2025 Highlights

• Global comparable store sales declined 1%, driven by a 2% decline in comparable transactions, partially offset by a 1% increase in average ticket
  • North America and U.S. comparable store sales declined 2%, driven by a 4% decline in comparable transactions, partially offset by a 2% increase in average ticket;
  • International comparable store sales were flat, driven by a 2% increase in comparable transactions, offset by a 2% decline in average ticket; China comparable store sales declined 1%, driven by a 5% decline in average ticket, partially offset by a 4% increase in comparable transactions
• Consolidated net revenues increased 3%, including on a constant currency basis, to $37.2 billion
• GAAP operating margin contracted 710 basis points year-over-year to 7.9%, primarily due to restructuring costs associated with the closure of coffeehouses and simplification of our support organization, deleverage, investments in support of “Back to Starbucks,” which were largely in labor hours, and inflation.
  • Non-GAAP operating margin contracted 510 basis points year-over-year to 9.9%, or contracted 500 basis points on a constant currency basis.
• Effective tax rate of 25.9% compared to 24.3% in the prior year. The increase was primarily due to the discrete impact of changes in indefinite reinvestment assertions for certain foreign entities in Q3, partially offset by the discrete impact of a tax status change for a certain foreign entity in Q1.
• GAAP earnings per share of $1.63 declined 51% over prior year
  • Non-GAAP earnings per share of $2.13 declined 36% over prior year, or a 35% decline on a constant currency basis