Starbucks Corp (NASDAQ:SBUX, ETR:SRB) posted weaker-than-expected third-quarter earnings on Tuesday, hit by softer customer traffic and higher costs, even as revenue topped Wall Street estimates.
Shares rose about 3.5% in after-hours trading to just over $96, as investors looked past short-term margin pressures and focused on comments from the company’s leadership about future growth.
Adjusted earnings per share came in at $0.50, sharply below analysts’ expectations of $0.65 and down 46% from a year earlier.
Operating margin fell to 10.1%, a drop of 660 basis points year-over-year, weighed in part by a discrete tax item that shaved $0.11 off EPS.
Total revenue rose 4% year-over-year to $9.5 billion, surpassing the $9.29 billion consensus estimate. However, global comparable store sales fell 2%, reflecting declines in both North America and international markets.
In the company’s key North America segment, revenue climbed 2% to $6.93 billion, but operating income dropped 36% and margin contracted 770 basis points to 13.3%. US comparable sales declined 2%, with a 3% drop in transactions partly offset by a 1% increase in average ticket size.
International performance was mixed. While revenue rose 9% to $2.01 billion, operating income slipped 5%. Comparable sales in China, Starbucks' largest international market, grew 2%, though overall international comp sales were flat, missing expectations for a 2.1% gain.
“We’ve fixed a lot... we are ahead of schedule. In 2026, we’ll unleash a wave of innovation that fuels growth,” said CEO Brian Niccol. “We’re building back a better Starbucks experience and a better business.”
The company added 308 net new stores during the quarter, bringing the global total to over 41,000, with 53% company-operated. The US and China together now account for 61% of Starbucks’ total store base.
While Channel Development revenue — which includes packaged coffee and ready-to-drink beverages — rose 10% to $483.8 million, operating margin declined sharply to 45.1%, down 860 basis points.