01—Abstract
Summary
Summary of the 8-K filed July 29, 2026. Cited figures are marked; the original filing is the authoritative source.
Starbucks reported fiscal Q3 2026 (13 weeks ended June 28, 2026) with global comparable store sales up 7.9%a, driven by a 4.2% increase in comparable transactions and a 3.5% increase in average ticket.
Consolidated net revenues fell 1.4% to $9.32 billionb, largely reflecting the April 2026 transfer of Starbucks China retail operations to a licensed joint venture with Boyu Capital (Starbucks retains a 40% stake). The headline GAAP diluted EPS of $0.91 (up 86%) was inflated by a $536.3 million divestiture gain; on a non-GAAP basis, EPS was $0.85 (up 70%) and non-GAAP operating margin expanded 430 bps to 14.4%. North America was the main engine, with comparable store sales up 8.1% and segment operating margin up 30 bps to 13.6%, while International margin rose sharply to 19.1% on the China deconsolidation.
Quality of earnings deserves scrutiny. Part of the margin improvement came from IEEPA tariff refunds recorded in product and distribution costs, which management says largely offset tariffs incurred in the first three quarters of fiscal 2026, so this benefit is non-recurring. Restructuring and impairment charges rose to $302.6 millionc in the quarter from $20.8 million a year earlier, and GAAP operating income grew only 4.8%.
Management raised its fiscal 2026 non-GAAP EPS outlook to $2.55 to $2.65d, guided Q4 U.S. comparable sales growth of 6.5% or greater, and kept consolidated net revenue guidance at flat to slight growth. Balance sheet deleveraging continued, with long-term debt falling to $11.8 billion from $14.6 billion after about $2.8 billion of repayments and $1.3 billion of tender offers funded partly by China sale proceeds.
The quarterly dividend was declared at $0.62 per share, payable August 28, 2026. Investors should weigh the strong comparable sales momentum and the 'Back to Starbucks' execution against the one-time nature of the China gain and tariff refunds, along with the shareholders' deficit of $7.7 billion, which persists despite the improvements.
02—Key points
Key Highlights
- Global comparable store sales rose 7.9% (transactions +4.2%, ticket +3.5%), marking four consecutive quarters of comp growth; North America comps were +8.1% and International +5.7%.
- Consolidated net revenues declined 1.4% to $9.32 billion, reflecting the China retail conversion to a licensed model, which cut International company-operated revenue by 50.8%.
- GAAP diluted EPS was $0.91 (up 86%), boosted by a $536.3 million net divestiture gain (about $0.47 per share); non-GAAP EPS was $0.85 (up 70%).
- Non-GAAP operating margin expanded 430 bps to 14.4%, though a portion of the benefit stems from IEEPA tariff refunds that largely offset prior-period tariff costs.
- Restructuring and impairment charges surged to $302.6 million from $20.8 million a year earlier, weighing on GAAP operating income, which grew only 4.8%.
- Fiscal 2026 non-GAAP EPS guidance is $2.55 to $2.65, with Q4 U.S. comparable sales growth of at least 6.5% and flat-to-slight-growth consolidated revenue.
- Long-term debt fell to $11.8 billion from $14.6 billion, and the company declared a $0.62 quarterly dividend, its 65th consecutive quarter of dividend payouts.
03—Questions
Frequently Asked Questions
Why did GAAP EPS jump 86% while revenue declined?
The increase was driven mainly by a $536.3 million net gain from divesting Starbucks China retail operations, worth about $0.47 per share. Excluding this gain and other non-GAAP items, EPS rose 70% to $0.85, still a strong gain but far less dramatic than the GAAP figure.
How much of the margin improvement is sustainable?
Part of the margin gain came from tariff refunds recorded in product and distribution costs that largely offset tariffs incurred in the first three quarters of fiscal 2026. These refunds are one-time in nature, so the underlying margin trajectory depends on continued sales leverage and cost discipline rather than on refunds.
What is the outlook for the rest of fiscal 2026?
Starbucks raised non-GAAP EPS guidance to $2.55 to $2.65 and expects Q4 U.S. comparable store sales growth of 6.5% or greater, which would lead to full-year U.S. comps slightly above 6% and global comps near 6%. Consolidated net revenue is expected to be flat to slightly up, non-GAAP operating margin above 11%, and 600 to 650 net new stores are planned.
How does the China joint venture affect future reporting and earnings?
China retail moved to a licensed joint venture model with Boyu Capital in the second half of fiscal 2026, so Starbucks now records product sales and royalties rather than store-level revenue there. Starbucks retains a 40% stake and continues to own the brand, which lowers reported revenue but supports International segment margins and royalty income.
Is the balance sheet improving, and is the dividend secure?
Yes. Long-term debt dropped to $11.8 billion from $14.6 billion, helped by repayments and tender offers funded with China sale proceeds, and the company declared a $0.62 dividend payable August 28, 2026. Starbucks still has a shareholders' deficit of about $7.7 billion, a structural feature of its capital allocation, but operating cash flow of $3.6 billion for the first three quarters comfortably covered $2.1 billion in dividends paid.
04—Continue