Starbucks 3Q revenue beats estimates, but income and same-store sales drop

Despite recording its sixth straight quarter of same-store sales declines, the market responded positively to Starbucks’ third quarter results. The Seattle, Washington-based company said revenue rose 4% to USD $9.5 billion for the third quarter ended July 29th, which was better than the $9.3 billion Wall Street estimated. Starbucks’ shares rose by 3.7% to USD $96.40. But global same-store sales fell 2% in the April-June period – more than the 1.5% decline expected.

North American stores performed better than forecasted, with same-store sales falling 2% – in line with the previous quarter’s decline – but a smaller decrease than the 2.5% projected by Wall Street. Transactions fell 3%, but average ticket rose 1% in the quarter. However, operating margins for North American stores were 7.7% lower year-over-year; significantly worse than the declines seen in international stores, which saw a 2% decline in operating margin year-on-year.

For the first time since late 2023, sales increased in China, the company’s second-biggest market with about 7,800 stores. Starbucks reported same-store sales growth of 2% for the quarter. Transactions rose 6%, but average ticket fell. Starbucks China cut the prices of several iced and tea-based drinks last month to compete with lower-priced local chains such as Manner Coffee and Luckin Coffee.

Starbucks’ profits dropped more than anticipated in its latest quarter as chairman and CEO Brian Niccol’s turnaround strategy continues. Net income fell 47% to $558 million in the April-June period. Adjusted for one-time items, earnings for the world’s biggest coffeehouse chain fell 46% to 50 cents per share for the quarter — lower than the 65 cents analysts had forecast.

The operating profit margin declined by 6.8 percentage points year on year to 9.9% in the quarter, driven in part by labour costs and a conference for store managers last month, where the company hosted 14,000 store managers and regional leaders.

“We’ve fixed a lot and done the hard work on the hard things to build a strong operating foundation, and based on my experience of turnarounds, we are ahead of schedule,” said Niccol in a statement. “In 2026, we’ll unleash a wave of innovation that fuels growth, elevates customer service, and ensures everyone experiences the very best of Starbucks. We’re building back a better Starbucks experience and a better business,” Niccol added.

To bring back customers, Starbucks is rolling out its “Green Apron Service” program across 11,000 North American stores next month, which emphasises customer interactions. The program will also feature an algorithm meant to deliver drinks to café and drive-through customers in fewer than four minutes. Starbucks has been hiring more baristas and employing new hospitality standards to entice customers back into stores after more than a year of falling sales.

The chain is also building fewer new US locations, instead focusing on improving its current cafés. Over the past few years, Starbucks has been removing seats from many of its cafés as it shifted to more mobile ordering and drive-thru transactions.

During its third quarter, Starbucks opened 308 new stores, finishing the period with 41,097 stores (53% company-operated and 47% licensed), with 61% of them in the US and China.

Starbucks also announced on Tuesday that it is bringing back Raspberry Syrup. Additionally, for a limited time only in US stores, consumers may also try the new Raspberry Cream Cold Brew, which combines Starbucks slow-steeped cold brew, sweet raspberry syrup, and a rich, creamy raspberry cold foam.