Starbucks 2025 Q3 Earnings Mixed Results as Net Income Declines 47%

Starbucks (SBUX), ranking 136th by market capitalization, reported its fiscal 2025 Q3 earnings on Jul 29th, 2025. The coffee giant posted mixed results, with consolidated net revenues slightly surpassing expectations at $9.5 billion, reflecting a 4% increase year-over-year. However, earnings per share (EPS) missed the mark, coming in at $0.50, down from the expected $0.84, and net income fell sharply by 47%. Despite these challenges, Starbucks remains optimistic about its turnaround strategy, although it did not provide specific guidance for Q4.

Revenue
Starbucks saw a 3.2% increase in total revenue to $8.92 billion for the third quarter of 2025, up from $8.64 billion in the same quarter of 2024. The revenue from company-operated stores amounted to $7.81 billion, while licensed stores contributed $1.11 billion. Additionally, the 'Other' segment added $537.90 million to the total net revenues, which reached $9.46 billion.

Earnings/Net Income
Starbucks's earnings per share declined notably by 47.3% to $0.49 from $0.93 in the previous year. Similarly, the company's net income dropped to $558.50 million, a stark decrease of 47.1% from the $1.06 billion recorded in Q3 of 2024. The earnings report indicates a challenging quarter for Starbucks.

Post Earnings Price Action Review
The strategy of purchasing Starbucks shares 30 days after quarterly earnings reports that exceed revenue expectations has underperformed over the past three years. The compound annual growth rate (CAGR) of this approach stands at 1.33%, yielding a total return of 6.43%, significantly trailing the benchmark return of 86.38%. The strategy's maximum drawdown was 0.00%, with a Sharpe ratio of 0.04, and it faced a volatility rate of 29.97%. These figures highlight the strategy's lackluster effectiveness in generating substantial returns compared to broader market benchmarks.

CEO Commentary
Brian R. Niccol, Chairman & CEO, expressed optimism regarding Starbucks' business performance, stating, “We are ahead of our expectations” and noting that “we are clearly in the early stages of our turnaround in the U.S.” He highlighted the company’s strategic priorities, emphasizing the “Back to Starbucks” plan, which aims to create a “stronger, more resilient” brand and improve customer experiences through operational changes, such as the rollout of Green Apron Service. Niccol also noted, “I believe more than ever in our Back to Starbucks plan,” reflecting his positive outlook on the company's future growth and innovation.

Guidance
Catherine R. Smith, Executive VP and CFO, provided preliminary thoughts on Q4, indicating a conservative approach due to uncertain consumer environments, stating, “we are pleased to be ahead of schedule with key foundational programs.” While official guidance was not provided, she mentioned the expectation for continued progress in 2026, with investments over $0.5 billion in labor hours and ongoing efforts to improve cost structures.

Additional News
Starbucks recently announced significant leadership changes and strategic initiatives. In June, Mike Grams was appointed as the Chief Operating Officer, a move aimed at accelerating the company's "Back to Starbucks" strategy. Additionally, the company hosted its largest-ever Leadership Experience 2025 event, bringing together over 14,000 coffeehouse leaders from North America. This event marked a key milestone in enhancing service and customer connections. Furthermore, Starbucks declared a quarterly cash dividend of $0.61 per share, payable on August 29, 2025, maintaining its commitment to shareholder returns with 61 consecutive quarters of payouts.