Starbucks Q4 Earnings Miss Estimates, Revenues Increase Y/Y

Starbucks Corporation SBUX reported mixed fourth-quarter fiscal 2025 results, with earnings missing the Zacks Consensus Estimate and net revenues beating the same. The top line increased year over year, but the bottom line declined from the prior-year quarter’s figure.

In the fiscal fourth quarter, the company reported progress of its “Back to Starbucks” turnaround strategy, citing a return to global comparable sales growth and improving momentum. Looking ahead, Starbucks remains focused on driving revenue growth, exercising cost discipline and achieving sustainable profitability over the long term.

Discussion on Q4 Earnings, Revenues & Comps of SBUX

In the fiscal fourth quarter, the company reported earnings per share (EPS) of 52 cents, missing the Zacks Consensus Estimate of 55 cents by 23.1%. The bottom line also decreased 35% from 80 cents reported in the prior-year quarter.

Starbucks Corporation Price, Consensus and EPS Surprise

Starbucks Corporation price-consensus-eps-surprise-chart | Starbucks Corporation Quote

Net revenues of $9.57 billion beat the consensus mark of $9.33 billion by 2.6%. The reported value was up 5.5% from the $9.1 billion reported in the prior-year quarter.

Global comparable store sales increased 1% year over year. The upside was backed by a 1% increase in comparable transactions.

Starbucks reported 107 net store closures in the fiscal fourth quarter, bringing the total count to 40,990 stores.

Starbucks’ Overall Margin Contracts in Q4

The company’s non-GAAP operating margin contracted 500 basis points (bps) to 9.4% from the prior-year quarter. The decline was primarily due to restructuring costs tied to store closures and the streamlining of its support organization. The margin pressure also caused by inflationary factors, increased labor investments under the “Back to Starbucks” initiative and overall operating deleverage.

SBUX’s Segmental Details

Starbucks has three reportable operating segments: North America, International and Channel Development.

North America: The segmental net revenues were $6.9 billion, up 3% year over year. The segment’s comparable store sales were at breakeven in contrast to a 6% fall reported in the prior-year quarter. Average transactions declined 1%, whereas the change in tickets rose 1% year over year.

Operating margin contracted 1420 bps to 4.5% from 18.7% in the prior-year quarter. Our model expected this segment’s operating margin to be 14.3% in the quarter.

International: This segment’s net revenues of $2.07 billion increased 9% year over year. Comparable store sales increased 3% year over year in contrast to a 9% fall reported in the prior-year quarter. Average transactions increased 6%, whereas the change in tickets fell 3% year over year.

Operating margin contracted 410 bps year over year to 10.8%. The downside was attributed to heightened promotional activity and store closures. We expected this metric to be 10.3% in the quarter.
    
In the fiscal fourth quarter, comps in China were up 2% against a 14% decline reported in the prior-year quarter. Transactions rose 9%, whereas the change in tickets fell 7% year over year.

Channel Development: Net revenues in the segment increased 17% year over year to $542.6 million. The upside was driven by an increase in contributions to the Global Coffee Alliance.

The segment’s operating margin contracted 800 bps year over year to 48.9%. A decline in North American Coffee Partnership joint venture income and a mix shift caused the downside. We expected the operating margin to be 43.8% in the quarter.

SBUX’s FY25 Highlights

Net sales in fiscal 2025 came in at $37.2 billion compared with $36.2 billion in fiscal 2024.

The non-GAAP operating margin in fiscal 2025 was 9.9% compared with 15% reported in the prior year.

Non-GAAP EPS in fiscal 2025 came in at $2.13 compared with $3.31 in the previous year.

SBUX’s Financial Details

The company ended the fiscal fourth quarter with cash and cash equivalents of $3.21 billion compared with $3.29 billion at the fiscal 2024-end. As of Sept. 28, 2025, long-term debt totaled $14.6 billion compared with $14.3 billion as of Sept. 29, 2024. The current portion of long-term debt as of the quarter’s end was $1.49 billion compared with $1.25 billion as of fiscal 2024-end.

Meanwhile, management declared a quarterly cash dividend of 62 cents per share. The dividend is payable on Nov. 28, 2025, to its shareholders of record as of Nov. 14.

SBUX’s Zacks Rank

Starbucks currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the Zacks Retail-Wholesale sector are Red Robin Gourmet Burgers, Inc. RRGB, Dutch Bros Inc. BROS and First Watch Restaurant Group, Inc. FWRG.

Red Robin currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Red Robin has gained 22.2% in the year-to-date period. The Zacks Consensus Estimate for Red Robin's fiscal 2025 sales indicates a decline of 2.8% year over year, while EPS suggests a rise of 82% from the year-ago period’s levels.

Dutch Bros presently carries a Zacks Rank #2 (Buy). The stock has gained 10.4% in the year-to-date period.

The Zacks Consensus Estimate for BROS’ 2026 sales and EPS implies growth of 23.8% and 29.7%, respectively, from the year-ago levels.

First Watch Restaurant presently carries a Zacks Rank #2. The stock has declined 8.3% in the year-to-date period.

The Zacks Consensus Estimate for First Watch Restaurant’s 2026 sales and EPS indicate an increase of 14.8% and 108.3%, respectively, from the year-ago levels.

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This article originally published on Zacks Investment Research (zacks.com).

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