It has been about a month since the last earnings report for Starbucks (SBUX). Shares have added about 4.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Starbucks due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Starbucks Q4 Earnings Miss Estimates, Revenues Increase Y/Y
Starbucks 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 Starbucks
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.
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.
Starbucks’ 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.
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.
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.
Starbucks’ 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.
Starbucks’ 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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Starbucks has a subpar Growth Score of D, a score with the same score on the momentum front. Charting a somewhat similar path, the stock has a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Starbucks has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Starbucks Corporation (SBUX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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