Starbucks’ third quarter results prompted a negative market reaction, as the company delivered revenue growth above Wall Street’s expectations but posted a notable shortfall on adjusted earnings per share. Management pointed to improving same-store sales and early momentum from its “Back to Starbucks” turnaround strategy, which included operational changes like expanded hours and enhanced in-store service. CEO Brian Niccol acknowledged ongoing investments in staffing and store renovations contributed to softer margins, stating these initiatives are intended to rebuild customer loyalty and transaction growth.
Is now the time to buy SBUX? Find out in our full research report (it’s free for active Edge members).
Starbucks (SBUX) Q3 CY2025 Highlights:
- Revenue: $9.57 billion vs analyst estimates of $9.33 billion (5.5% year-on-year growth, 2.6% beat)
- Adjusted EPS: $0.52 vs analyst expectations of $0.56 (6.5% miss)
- Adjusted EBITDA: $1.33 billion vs analyst estimates of $1.36 billion (13.9% margin, 2.7% miss)
- Operating Margin: 2.9%, down from 14.4% in the same quarter last year
- Locations: 40,990 at quarter end, up from 40,199 in the same quarter last year
- Same-Store Sales rose 1% year on year (-7% in the same quarter last year)
- Market Capitalization: $90.5 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Starbucks’s Q3 Earnings Call
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David Palmer (Evercore ISI) asked about whether the “Back to Starbucks” strategy is sufficiently comprehensive given changing consumer habits; CEO Brian Niccol emphasized that the initiative addresses all channels, not just in-cafe, and aims to improve customer connection across mobile, drive-thru, and delivery.
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Danilo Gargiulo (Bernstein) inquired about customer response and pricing sustainability for the new protein beverage platform. Niccol responded that feedback has been positive, with value scores rising and customization options resonating with consumers.
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David Tarantino (Baird) questioned the pace and impact of the Green Apron Service rollout. Niccol said initial pilot stores continued to outperform, and full benefits are expected to build as both staff and customers adapt to the new service model.
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Sara Senatore (Bank of America) asked about the impact of store closures on profitability and future margin trends. CFO Cathy Smith explained closures target unprofitable units and are expected to be slightly accretive to margins, with sales partially transferring to nearby stores.
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Andrew Charles (TD Cowen) sought clarification on how improved value perception will shape pricing strategy in the coming year. Niccol stated pricing decisions would remain targeted and responsive to inflation, with an emphasis on maintaining value for customers.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the sustained impact of Green Apron Service on transaction comps and customer satisfaction, (2) the progress of store renovations and new small-format prototypes in the U.S., and (3) the trajectory of international sales growth—particularly in China. Additional focus will be on cost control measures and the effectiveness of menu innovation in driving customer traffic.
Starbucks currently trades at $79.42, down from $84.16 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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