SBUX

A month has gone by since the last earnings report for Starbucks (SBUX). Shares have added about 1.3% in that time frame, underperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Starbucks due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Starbucks Corporation before we dive into how investors and analysts have reacted as of late. Starbucks Corporation reported mixed third-quarter fiscal 2026 results, with adjusted earnings beating the Zacks Consensus Estimate but net revenues missing the same. Adjusted earnings of 85 cents per share topped the consensus estimate of 66 cents by 28.8% and increased 70% year over year. Net revenues of $9.32 billion missed the consensus mark of $9.44 billion by 1.22% and declined 1.4%. Global comparable store sales increased 7.9%, driven by transaction and ticket growth. Starbucks’ GAAP operating income increased 4.8% year over year to $980.4 million. GAAP operating margin expanded 60 basis points to 10.5%, supported by sales leverage and lower inflation paired with tariff refunds.These benefits were partially offset by higher restructuring costs and labor investments largely tied to the “Back to Starbucks” plan. Restructuring and impairment expenses increased to $302.6 million from $20.8 million in the prior-year quarter.On a non-GAAP basis, operating margin expanded 430 basis points year over year to 14.4%. Product and distribution costs declined 4.3%, while depreciation and amortization expenses decreased 15.4%. General and administrative expenses fell 11.6%. North America remained Starbucks’ largest revenue contributor. Segment net revenues increased 6.8% year over year to $7.40 billion, primarily reflecting growth in company-operated store revenues.Comparable store sales rose 8.1%, driven by a 4.5% increase in comparable transactions and a 3.5% rise in average ticket. The company attributed the improvement to higher delivery sales and strength in customer food attachment and beverage modifications.North America’s operating income increased 9.8% to $1.01 billion from $918.7 million. Operating margin expanded 30 basis points to 13.6%, aided by sales leverage, lower inflation, tariff refunds and the comparison with Leadership Experience costs in 2025.Higher restructuring expenses, labor investments supporting the company’s turnaround strategy and unfavorable product mix partly offset the segment’s profitability gains. International segment net revenues declined 34.2% year over year to $1.32 billion. The decrease primarily reflected the conversion of Starbucks retail operations in China to a licensed joint venture model during the fiscal third quarter.Comparable store sales grew 5.7%, supported by a 2.6% rise in transactions and a 3.1% increase in average ticket. Starbucks ended the quarter with 22,933 International stores, up 3% year over year.International operating income declined 7.3% to $252.8 million. However, operating margin expanded 550 basis points to 19.1%, primarily benefiting from the transition of the China business to the licensed joint venture structure. Higher restructuring costs partly offset the margin improvement. Channel Development posted strong fiscal third-quarter growth, with net revenues increasing 21.5% year over year to $587.9 million. This improvement was primarily driven by higher revenues from the Global Coffee Alliance.Segment operating income increased 40.2% to $306.2 million from $218.4 million. Operating margin expanded 700 basis points to 52.1%, supported by tariff impacts, including refunds.These benefits were partially offset by product mix shifts and lower income from the North American Coffee Partnership joint venture relative to segment revenue growth. Starbucks ended the quarter with cash and cash equivalents of $3.45 billion, up from $3.22 billion at the end of fiscal 2025. Long-term debt declined to $11.78 billion from $14.58 billion.During the first three quarters of fiscal 2026, operating activities generated $3.60 billion in cash. Capital expenditures totaled $887.8 million, while cash dividends paid amounted to $2.12 billion.The company used a portion of the China transaction proceeds to repurchase approximately $1.3 billion of outstanding senior notes through tender offers. Starbucks declared a quarterly dividend of 62 cents per share, payable Aug. 28, 2026, to shareholders of record as of Aug. 14. Starbucks raised its fiscal 2026 outlook following stronger comparable-sales and margin performance. The company now expects full-year U.S. comparable store sales growth slightly above 6%, compared with its previous forecast of at least 5%. Global comparable store sales growth is projected to approach 6%, up from the earlier expectation of at least 5%.For the fiscal fourth quarter, SBUX expects U.S. comparable store sales growth of at least 6.5%. Consolidated net revenues are projected to remain flat or increase slightly year over year, while non-GAAP operating margin is expected to exceed 11%. Previously, management had called for year-over-year non-GAAP operating margin improvement without providing a specific threshold.The company raised its adjusted earnings guidance to $2.55-$2.65 per share from the prior range of $2.25-$2.45. Starbucks maintained its plan to open approximately 600-650 net new coffeehouses globally across company-operated and licensed businesses. Since the earnings release, investors have witnessed a upward trend in fresh estimates. Currently, Starbucks has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Starbucks has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Starbucks belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, Cheesecake Factory (CAKE), has gained 8.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. Cheesecake Factory reported revenues of $1.03 billion in the last reported quarter, representing a year-over-year change of +7.7%. EPS of $1.44 for the same period compares with $1.16 a year ago. For the current quarter, Cheesecake Factory is expected to post earnings of $0.85 per share, indicating a change of +25% from the year-ago quarter. The Zacks Consensus Estimate has changed +18.7% over the last 30 days. Cheesecake Factory has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX) : Free Stock Analysis Report The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Starbucks Corporation SBUX enters the final quarter of fiscal 2026 with stronger comparable sales and earnings trends. Global comparable sales rose 7.9% in the fiscal third quarter, while net revenues reached $9.3 billion. EPS increased 70% year over year to 85 cents. The improvement was supported by higher customer traffic and spending, giving the company a stronger base for earnings growth.The U.S. business provides a key base for this growth. Comparable sales increased 7.9%, driven by a 4.2% rise in transactions and a 3.6% improvement in average ticket. Food attach reached a quarterly record across U.S. company-operated stores, while delivery and product modifications supported ticket growth. The balanced contribution from traffic and ticket growth gives the company a stronger foundation for earnings as comparable sales improve.Starbucks’ stronger comparable sales also supported margin expansion. Consolidated operating margin expanded 430 basis points to 14.4%, while North America margin increased 280 basis points year over year. Sales leverage, operational improvements and cost savings helped offset investments in Green Apron Service and menu innovation. The company also reduced G&A expenses by about 20%, with the decline supported by cost savings, the China business deconsolidation and the comparison with higher leadership-related expenses in fiscal 2025.Starbucks raised its fiscal 2026 expectations following the stronger performance. U.S. comparable sales are projected to grow a little more than 6%, while global comparable sales are expected to approach 6%. Consolidated operating margin guidance was raised to above 11%, and EPS guidance increased to $2.55-$2.65. Starbucks also expects coffee price pressure to ease in the fiscal fourth quarter, which could reduce a previous drag on margins.The earnings trajectory will depend on whether Starbucks can maintain comparable sales growth while preserving the margin gains achieved in the third quarter. The company remains on track with its $2 billion cost-savings plan through fiscal 2028. Sales leverage and cost savings could support earnings as comparable sales grow. However, the company expects continued variability in the broader consumer environment, making traffic growth an important factor for fiscal fourth-quarter performance. Shares of Starbucks have gained 18.5% in the past year against the industry’s 7.3% decline. In the same time frame, other industry players like Dutch Bros Inc. BROS and McDonald's Corporation MCD have declined 23% and 14.7%, respectively. Image Source: Zacks Investment Research From a valuation standpoint, SBUX trades at a forward price-to-sales (P/S) multiple of 3.06, below the industry’s average of 3.09. Conversely, industry players, such as Dutch Bros and McDonald's, have P/S multiples of 3.43 and 6.5, respectively. Image Source: Zacks Investment Research The Zacks Consensus Estimate for SBUX’s fiscal 2026 earnings per share has increased in the past 30 days. Image Source: Zacks Investment Research The company is likely to report strong earnings, with projections indicating a 21.1% rise in fiscal 2026. Conversely, industry players like McDonald's are likely to witness an increase of 5.6%, year over year, in 2026 earnings. Meanwhile, Dutch Bros’ 2026 earnings are likely to witness a rise of 27.6% year over year.SBUX currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX) : Free Stock Analysis Report McDonald's Corporation (MCD) : Free Stock Analysis Report Dutch Bros Inc. (BROS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The stock has not been priced this richly against its own sales at any point in a decade, and part of the earnings growth that price pays for comes from an exchange-rate swing rather than from the operation. Coca-Cola (KO) closed at $88.82 on Aug 18, 2026, effectively at its 52-week high after a 30.6% total return over the past year. Nothing in the operation is breaking, which is what makes the risk here hard to see. The price now pays for peak profitability, and the most recent step up in earnings growth came partly from outside the operation. The company's $50.1 billion of revenue over the trailing twelve months is priced at 7.6 times sales. That multiple has run between 4.3 and 7.1 over the past decade, so the stock is now above the top of its own ten-year range. The stretch is measured against its own history, not against any peer. A price set there is not asking the business to accelerate; it is asking it not to stumble. Net margin over the trailing twelve months is 28.6%, the highest in at least five years and well above its 24.9% three-year average. Management attributes the comparable operating margin expansion in Q2 2026 to underlying expansion and currency tailwinds together. The company's full-year 2026 guide carries an approximate 3-point currency tailwind inside comparable earnings per share growth of 9% to 10%. Foreign exchange ran the other way for years before it turned. Earnings growth built in the operation and earnings growth handed over by an exchange rate are not the same asset, a distinction the Trefis High Quality Portfolio makes when it looks for strong margins alongside sustainable revenue growth in its holdings. Worldwide unit case volume grew 5% in Q2 2026, and the company names what made the quarter run hot: an easier prior-year comparison, favorable weather in certain markets, and a FIFA World Cup activation that helped carry Trademark Coca-Cola to its strongest volume growth in 17 years, excluding the pandemic recovery. On a two-year average, that worldwide volume line runs 2%. Adding new drinkers costs something: comparable operating income in Asia Pacific declined in Q2 2026 even as volume grew across all of its operating units, and management puts that decline down to widening the consumer base across income levels, an effort that includes affordability initiatives and cold drink equipment. Volume built for the long term is being paid for out of segment profit. Management guides 2026 organic revenue growth to about 5%, below the 6% organic growth reported for Q2 2026, and says the second half of 2026 cycles a higher comparison, with six fewer days in the fourth quarter. The deceleration is scheduled, not the risk. What is unsettled is whether it arrives with mix improving or with more investment behind it. None of this describes a company in trouble; it describes a stock the market has barely marked down at any point in the past year, when the deepest peak-to-trough drop reached just 7.9%. How wide a range the options market is pricing over the next twelve months is the cheapest read on whether anyone else is worried yet. The risks here are not existential; they sit in one multiple, one margin cycle and one investment cycle, and a holder owns all three. Spreading that defensive intent across the Trefis High Quality Portfolio is a different exposure from paying the top of a decade-long range on sales for one franchise. That portfolio has a track record of outpacing the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000.

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Starbucks (SBUX) is back in the spotlight after reporting fiscal third quarter results on July 29, 2026, with revenue of US$9.32b and net income of US$1.05b. Earnings per share from continuing operations were US$0.92 basic and US$0.91 diluted. For the first nine months of the fiscal year, Starbucks reported revenue of US$28.77b and net income of US$1.85b. Basic and diluted earnings per share from continuing operations were US$1.62. Alongside these figures, Starbucks raised full year 2026 guidance. Management now expects consolidated net revenues to be flat or show slight growth year over year, with diluted GAAP earnings per share in a range of US$2.14 to US$2.24. The company also updated investors on its long running buyback program. Between March 30 and June 28, 2026, Starbucks repurchased no additional shares, while confirming that 670,188,630 shares have been bought back since the program began in 2006. See our latest analysis for Starbucks. Starbucks shares trade at US$105.58, with a year to date share price return of 25.74% and a 1 year total shareholder return of 17.64%, which suggests recent momentum has strengthened after a quieter few months. If this earnings update has you thinking about where else growth and income stories might emerge, it could be worth scanning 20 top founder-led companies as a starting point. After a strong run in Starbucks shares and a lift in guidance, the balance between improving fundamentals and a richer share price is front and center. Does the current valuation still leave enough upside to justify the risk? Starbucks most followed valuation narrative puts fair value at $106.25, almost exactly in line with the recent $105.58 close. This keeps the focus on execution rather than a big pricing gap. Read the complete narrative. Want to understand why this narrative supports a higher earnings profile for Starbucks while still using a relatively demanding profit multiple on future results? The key is how revenue growth, margin expansion and the chosen discount rate are combined into a tight valuation story that leaves little room for error but plenty of interest for investors who agree with those assumptions. Result: Fair Value of $106.25 (ABOUT RIGHT) Have a read of the narrative in full and understand what's behind the forecasts. However, Starbucks still faces pressure from higher labor costs and a 1% comparable store sales decline, which could challenge the margin and turnaround narrative if these trends persist. Find out about the key risks to this Starbucks narrative. The fair value narrative for Starbucks centers on a tight gap between the US$105.58 share price and the US$106.25 model estimate. Market pricing tells a different story. Starbucks currently trades on a P/E of 60.7x, compared with a US Hospitality industry average of 23.2x and a peer average of 45.4x. The fair ratio for Starbucks is 41.4x, which is well below the current 60.7x level. That gap suggests investors are already paying up for future earnings that still need to come through, so the question is whether the next few years of results will be strong enough to keep that premium in place. See what the numbers say about this price — find out in our valuation breakdown. With mixed signals around Starbucks valuation and business momentum, it makes sense to look at the underlying data yourself and act promptly on your own assessment. To weigh both sides of the story and stress test your view, start with the 1 key reward and 3 important warning signs. If Starbucks has sharpened your focus on valuation and quality, do not stop here. The right screener can help you surface other compelling opportunities fast. Spot potential bargains early by scanning companies that currently screen as 51 high quality undervalued stocks. Prioritise balance sheet strength and business resilience with the solid balance sheet and fundamentals stocks screener (49 results). Hunt for overlooked quality by checking the screener containing 19 high quality undiscovered gems. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SBUX. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Wednesday, July 29, 2026 at 4:15 p.m. ET Chairman and Chief Executive Officer - Brian Niccol Executive Vice President and Chief Financial Officer - Cathy Smith Vice President of Investor Relations - Catherine Park Operator: Good afternoon, and welcome to Starbucks' Third Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions]. I will now turn the call over to Catherine Park, Vice President of Investor Relations. Ms. Park, you may now begin your conference. Catherine Park: Good afternoon, and thank you for joining us today to discuss Starbucks' third quarter fiscal year 2026 results. Today's discussion will be led by Brian Niccol, Chairman and Chief Executive Officer; and Cathy Smith, Executive Vice President and Chief Financial Officer. This conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factors discussed in our filings with the SEC. Starbucks assumes no obligation to update any of these forward-looking statements or information. Revenue, operating margin and EPS growth metrics referenced on today's call are non-GAAP and measured in constant currency. All other metrics referenced on today's call are non-GAAP. Please refer to the earnings release and our website at investor.starbucks.com to find reconciliations of these non-GAAP measures to the corresponding GAAP measures and supplemental financial information. This conference call is being webcast, and an archive of the webcast will be available on our website through Friday, September 11, 2026. And for your calendar planning purposes, please note that our fourth quarter fiscal year 2026 earnings conference call is tentatively scheduled for Thursday, October 29, 2026. I'll now turn the call over to Brian. Brian Niccol: Good afternoon, and thanks for joining. Before I begin, I want to acknowledge the devastating earthquake in Japan. We're grateful that all our partners are safe, and our thoughts are with all those affected. For more than 30 years, we've been part of communities across Japan, and we'll be there to support them as they recover. So now turning to our results for the quarter. In Q3, we delivered our fourth consecutive quarter of positive global comps and our second consecutive quarter of consolidated margin growth. It's clear proof that our Back to Starbucks plan is working. Starbucks' mission was built on a simple belief, an extraordinary cup of coffee, human connection and a great customer experience matter. Our strong third quarter proves this enduring truth delivers enduring results. We bring this truth to life in our coffee houses every day through an experience that engages the senses, celebrates the craft of coffee and brings people together. It's in the aroma of fresh ground coffee that greets you at the door, the symphony of sounds of a drink being handcrafted, the pride our partners have when they put on the green apron. It's the moment of connection between a barista and a customer. It's the smile on their face after that first sip and the feeling of belonging that follows. It's about every detail coming together to create an experience that feels distinctly Starbucks. That's the magic of the third place. It's a human need only we can fulfill and a community only Starbucks can create. We're reclaiming it, one customer, one cup, one coffee house at a time, and we're on our way to becoming the world's greatest customer service company. This is the Starbucks that's taking shape, one that's true to itself, built to perform consistently year after year. And our third quarter results and performance this year give us the confidence to raise our full year 2026 guidance. Let's start with the financial highlights. In Q3, consolidated net revenues were $9.3 billion, led by sequentially improving global comp growth of 7.9%. Consolidated operating margin expanded 430 basis points year-over-year to 14.4% and earnings per share grew 70% year-over-year to $0.85. North America continued to lead our performance in the quarter. Company-operated comparable sales increased 8.1% and licensed coffeehouse net revenues were roughly flat despite net closures in the quarter. We also reached a milestone with North America operating margin growing year-over-year for the first time since Q1 fiscal 2024. This was driven by operational improvements across both our company-operated and licensed businesses. Breaking down our performance further, in the U.S., comps were up 7.9%, driven by balanced transaction and ticket growth. And in Canada, comps were even stronger. International company-operated comparable sales grew 5.7%, driven by continued strength in Japan and the U.K. International licensed store revenues grew year-over-year. And in total, our international business posted its sixth consecutive quarter of positive system-wide comps, underscoring our global relevance and the power of our diversified portfolio across 90 markets. Our operational discipline and cost savings work are making us a more focused, nimble company that prioritizes better, spend smarter and invest with intent. We're now seeing the benefits of that work. And as our revenues grow, more is flowing through to earnings. We said we would drive sales growth first and earnings would follow. Our results show we're walking the talk. We're on the right path, and we remain ahead of schedule. Now let me turn to the progress we've made across the business driven by our Back to Starbucks plan. First, we continue to fine-tune our Coffee House operations to sustain momentum and perform with more consistency at scale. This August marks 1 year since we launched Green Apron Service and has become the operating foundation of Back to Starbucks. We gave ownership and accountability back to Coffee House leaders. We invested in the tools, hours, standards and coaching our partners need to deliver with consistency, and we made it clear what great looks like. Our focus on Green Apron Service has been a real game changer for our business. It's given us a platform to fix the operational issues we faced. It's helped us reset expectations, refocus on the customer and remove barriers to growth. That progress is evident in our simplified Grow coffeehouse reporting and ranking system. Across North America, 2/3 of our company-operated coffee houses are now at 4 or more shots, up more than 5 points quarter-over-quarter and more than 40 points since it launched last October. We're also getting sharper in how our coffee houses run. Smart Queue is getting smarter as we optimize for greater accuracy and speed. On average, we achieved target service times across every access point in Q3, even with transaction growth across dayparts. Our supply chain work is creating a better and more predictable experience for our customers. More Coffee House ownership, better customer-focused ordering guidance, improved reporting and expanded daily delivery are all working together to get the right product to the right coffee house at the right time. It's improving our food availability rate, which is close to 99% today. That's about 10 points better than it was just a year ago. Our Coffee House leadership is more stable, too. In the third quarter, the percentage of North America Coffee House leaders who have been enrolled for 2 years or more improved by about 7 points year-over-year. That's important because we've seen Coffee House leader stability is highly correlated to store performance. Internal hiring for retail leadership, including Coffee House coaches, is up year-over-year as well. That creates more development pathways for partners and gives our Coffee House teams the continuity they need to execute consistently. We also built on our long-standing efforts to ensure partner share in our success, launching the Best of Starbucks Reward at the close of the quarter. This new incentive allows eligible Green Apron partners the opportunity to earn up to $300 per quarter for meeting Coffee House performance goals across sales, operations and customer service. Looking forward, we're focused on delivering exceptional service with speed. When we get it right, customers feel it in their experience. We earn trust with every cup served, and we become more than just a great coffee company. We become the place where people connect and the gold standard for customer service. Second, our brand continues to become more visible, relevant and loved. Brand affinity, consideration and purchase intent were all at 5-year highs in the quarter, and customer connection improved significantly year-over-year. Customers continue to see worth and value in their Starbucks purchase, and we see it in how they behave. Sales growth in Q3 was broad-based across generations and income groups and across both Starbucks Rewards members and nonmembers, even with the continued pressure on U.S. consumer sentiment. Marketing and innovation helped drive that resilience. We've built a strong innovation pipeline anchored in customer rituals and amplified by cultural moments. Refreshers remained a standout platform for us in Q3, delivering double-digit year-over-year revenue growth in the U.S. and customizable energy refreshers, Blue Coconut and Mango kept customers engaged, expanded the platform to new occasions and gave them more reasons to visit throughout the day. Our marketing team has done a great job putting us back in front of culture from Coachella and Soccer Captain Cup Sleeves to a Miffy Merch Drop and our viral Pink Bearista. We're creating moments that people notice, talk about and want to be a part of. Starbucks Rewards is reinforcing the daily ritual and building more connection with customers. We now have 35.8 million 90-day active members in the U.S. It's only been 4 months since we launched our new program, and we're already seeing members leveling up from Green to Gold and Gold to Reserve. The program also gives us more ways to directly engage with customers and turn a visit into a routine. Free Mod Monday is a great example. One in 3 members who tried a new modification through this benefit reordered it in subsequent weeks. In the U.S., we also provided Starbucks Reward members early access to our S'mores coffee lineup, highlighting the value of being a member. S'mores beverages are resonating particularly well with Gen Z customers and are tracking as our strongest summer coffee LTO launch in the past several years. Taken together, our brand flywheel is working. We're creating experiences people are excited about, turning engagement into rituals and deepening customer connection that fuels long-term growth. Third, we continue to improve the third place experience with coffee house uplifts, adding back warmth, texture and great seats at a fraction of the cost of earlier remodels. In Q3, we surpassed 1,000 total uplifts across North America, reaching our fiscal 2026 goal ahead of plan. Early data from uplifted coffee houses show transaction lift across access points, dayparts, formats and customer segments. In short, we like what we're seeing, and they're proving to be a strong brand halo. That's why we're accelerating our pace with the intention of completing at least 1,500 uplifts by fiscal year-end 2026 and accelerating further in fiscal 2027. Turning to international. We continue to position Starbucks as a world-class global licensor. With our China business now operating under the new joint venture, about 90% of our international portfolio is now managed through a license structure. This gives us a capital-light model that lets us scale our brand with discipline through strong local partnerships. We're taking learnings from our North America license business to evolve how our international model works. These changes allow us to better reinforce brand standards, financial discipline and shared accountability through our growth system and create a more consistent, unified performance management lens across our coffee house portfolio. We're also reshaping our international support organization around our vision. We see international as a capital-efficient way to build our brand around the world, and we're building the structure to support that opportunity and help our licensed business partners grow with us. Looking ahead, as the business continues to strengthen, we have a clear view of where we're performing well, where we can move even faster and where there are outliers that require our focus. In our coffee houses, we'll keep raising the bar by unlocking more throughput, driving a better customer experience and supporting our Green Apron partners who bring it to life. Across branded menu, we will keep showing up in ways that are true to Starbucks. We're finishing the summer season with a strong menu lineup that includes blended refreshers, our legendary Unicorn Frappuccino and new orange cream beverages, and we'll begin testing sparkling beverages in select markets. We'll mark the return of fall with our iconic Pumpkin Spice Latte and kick off the holidays with our fan favorite Peppermint Mocha. And we'll keep driving fandom with a steady pace of buzzworthy merch launches and continued innovation season after season. In supply chain, we will continue scaling daily delivery and testing a 24-hour operating clock to improve speed, availability and reliability. And in technology, fiscal 2027 will be an important modernization year with new inventory ordering, staffing and scheduling and point-of-sale systems to improve execution and make our coffee houses easier to run. Finally, we're applying more discipline to how we grow our global footprint. We remain excited about the white space for new coffee houses in the U.S. and around the world, and we're making sure every new coffee house we open earns its place. We've developed and globally tested new coffee house prototypes that meet our expectations for accelerating international unit growth, and we're applying those learnings to shape our development approach in the U.S. As a result, the composition of U.S. and international new store growth may evolve as we build a stronger U.S. development pipeline and redirect near-term resources to accelerate the pace of our uplift program, where results are already tangible. We remain confident in our global growth ambitions and our long-term opportunity in North America. While net new company-operated unit growth in North America may remain modest through fiscal 2027, we expect international to be a meaningful contributor to unit growth. To conclude, our Back to Starbucks plan was built on the belief that human connection and a great customer experience win the day, every day. And our Q3 results prove they do. Our investments are paying off. More customers are choosing Starbucks more often. Partners are creating more moments of connection. Our brand is more visible, relevant and loved. Our coffee houses are more warm and welcoming, and our business is delivering on its commitments. I want to thank our partners around the world. Your craft, care and focus are making our coffee houses better every day. Customers feel it, and it is showing up in our results. We still have work to do, but the opportunity is significant and clear. We're focused on finishing the fiscal year strong, and we will be relentless in our efforts to reclaim the third place, become the world's greatest customer service company and deliver durable long-term growth. With that, I'll turn it over to Cathy. Catherine Smith: Thank you, Brian, and thank you all for joining today. Our third quarter results demonstrate the progress we continue to make on both the top and bottom line and the growing durability of our performance. I want to thank our partners across our coffee houses, supply chain and support centers whose execution is helping us advance our Back to Starbucks plan and reclaim the third place. Let me now take you through our Q3 results, and then I'll share how we're thinking about the balance of the year. Consolidated net revenues were $9.3 billion, down 1% from the prior year, largely driven by the transition of the China retail business to our new joint venture license structure in the third quarter. Global comps grew 7.9%, improving sequentially from the second quarter and led by transaction growth of more than 4%. Our North America segment revenues were $7.4 billion with comparable store sales up 8.1%. And in the U.S., comps grew 7.9%, led by transactions up 4.2% and average ticket up 3.6%. We're pleased with the healthy composition of transaction and ticket growth, which we believe reflects the strengthening fundamentals of our business. As Brian mentioned, our growth was broad-based across dayparts, income levels and access points. Average ticket increases were led by sustained strength in our delivery business as well as innovation-led modifications and attach. In fact, food attach reached a Q3 record across our U.S. company-operated business with growth across all dayparts and the strongest gains in the afternoon. Pricing contributed less than 1 point of ticket growth in the quarter. 90-day active Starbucks Rewards members grew both quarter-over-quarter and year-over-year to $35.8 million. Our new program is exceeding our expectations on multiple fronts, including engagement and average stored-value card reload amounts, which continue to grow. Overall, our North America store base was 18,371 coffee houses at the end of the quarter. This included 27 net new openings across our company-operated business and 41 net closures within our licensed portfolio. North America licensed revenues were roughly flat year-over-year, reflecting these net store closures in the quarter. U.S. licensed coffee houses delivered another quarter of positive system-wide comps, led by continued strength in our travel and leisure segments. Moving to international. Company-operated comparable store sales grew 5.7%, led by a healthy mix of ticket and transactions. Japan, now our largest international company-operated market, was a key driver of that strength, delivering compelling innovation tied to its 30th anniversary celebration and supported by both nostalgic beverages and effective marketing. Performance was also helped by a favorable prior year comparison. The segment delivered $1.3 billion of Q3 net revenues, positive system-wide comps across a diversified portfolio and $300.9 million of Q3 operating income. Beginning this quarter, Starbucks retail operations in China were deconsolidated from our financials and reported as a licensed business with our 40% joint venture economics reflected as part of income from equity investees. This transition is the main driver of the year-over-year changes in our International segment reporting. To help with your models, here are a few data points detailing China's contribution to our Q3 International segment P&L and our current view of how the economics to Starbucks will evolve. In the third quarter, we reported $53 million of net revenues attributable to China within our international P&L and operating margin above 100%, reflecting the structure's margin-accretive nature. As the joint venture moves beyond this transitional period and scales, we expect our economics to build over time. The operating landscape in China continues to evolve and the end-market team is working to drive higher quality growth and local relevance. It is still early, but we remain confident in the joint venture's ability to reinvigorate sustainable growth in China and to reach up to 20,000 coffee houses over time. Our international portfolio ended the quarter at 22,933 coffee houses, including 189 net new openings in the quarter. In Channel Development, net revenues grew 22% year-over-year to $587.9 million, helped by coffee inflation. Our multi-serve refresher concentrate and sweet cream are generating strong engagement with trial and repeat rates more than twice what we typically see in the business. In North America, we also recently launched a zero-sugar option to extend our Starbucks Doubleshot Energy beverage platform. We continue to work with our partners to innovate and extend our brand to more customers and more places around the world. Moving to margin. Our third quarter consolidated operating margin was 14.4%, expanding approximately 430 basis points from the prior year, our second consecutive quarter of consolidated margin expansion. This was largely driven by sales leverage, supported by our cost savings efforts as well as lower inflation paired with reciprocal tariff refunds. The refunds we received in Q3 largely offset related tariffs incurred in the first 3 quarters of fiscal 2026. As such, we believe the year-to-date view provides a more normalized perspective. More precisely, in the quarter, our consolidated product and distribution costs were 30.3% as a percentage of net revenues. We believe the better proxy for a more normalized Q3 COGS rate is the year-to-date metric of 32.3%. Crucially, both consolidated and North America operating margins expanded year-over-year even without the impact of tariff refunds, underscoring the strengthening fundamentals of our operating model. In North America, our third quarter operating margin expanded approximately 280 basis points year-over-year. When excluding the impact of tariff refunds, Q3 North America margin improved more than 100 basis points year-over-year. Stronger sales leverage, operational focus and cost savings are helping offset our investments in Green Apron Service and menu innovation. As we expected, coffee remained a cost headwind in the quarter, but the impact was lower than the first 2 quarters of the fiscal year. Consolidated G&A decreased by approximately 20% in the quarter, driven by a combination of our cost savings efforts, deconsolidation of our China business and lapping expenses related to our leadership experience in fiscal 2025. Our effective tax rate of 21.8% moderated versus the prior year, reflecting favorable updates to full year tax estimates and a cumulative catch-up adjustment in the quarter. All in, Q3 earnings per share grew approximately 70% year-over-year to $0.85, a meaningful step towards earnings recovery. We also made solid progress on our balance sheet during the quarter. Using a portion of the China transaction proceeds, we repaid approximately $1.8 billion of our debt and further reduced our leverage to 2.9x, supporting our investment-grade profile and strengthening our financial flexibility. This allows us to continue investing in the business, maintain our competitive dividend and create longer-term value for shareholders. Turning to our outlook. We believe our top line momentum is becoming more durable. Margin expansion is taking hold and our balance sheet is stronger. While the current operating environment remains dynamic, these factors support our confidence in the trajectory of our business. As a result, we are raising our guidance for fiscal year 2026. With 1 quarter left in the year, we expect our fourth quarter comp growth in the U.S. to be 6.5% or better. We are encouraged by our strong start to the quarter, but also recognize the year-over-year traffic comparisons we will lap and the continued variability in the broader consumer landscape. This implies full fiscal year 2026 U.S. comp growth of a little more than 6% and global comp growth nearing 6%. We expect full fiscal year 2026 consolidated net revenues to be flat to slightly higher year-over-year as we continue to account for the impact of our new China structure. We're also raising our full fiscal year 2026 consolidated margin guidance to greater than 11%. We expect the same fundamental drivers that supported margin expansion in Q3 to continue in Q4. Sales leverage, disciplined execution and continued progress against our cost savings initiatives should help offset investments in our Back to Starbucks priorities, particularly as we anniversary the launch of Green Apron Service in August. In coffee, we expect coffee price pressures to continue easing in Q4 and become largely immaterial to the year-over-year margin comparisons. It is also worth noting that our channel development revenues can move with coffee price trends given the structure of our CPG business. We remain on track with our $2 billion cost savings plan. As a reminder, these are gross savings, which we expect to realize through fiscal 2028 and are balanced across product and distribution costs, OpEx and G&A. This year, the impact of our efforts are most visible in G&A and our other operating expenses line. We continue to expect our fiscal 2026 consolidated G&A dollars to run below fiscal 2023 levels. For tax, we assume our effective tax rate in Q4 returns to a more normal level in the mid-20s. Putting this all together, we are raising our EPS guidance at both ends of the range to between $2.55 and $2.65. Finally, from a unit count perspective, our expectation for approximately 600 to 650 net new coffee house openings in fiscal 2026 remains unchanged. This continues to be supported by strong contribution from our international business. And in North America, while overall performance has strengthened, we are gaining deeper visibility into some underperforming coffee houses, which could result in some closures. As always, we will continue to assess our North America portfolio to ensure we have a healthy foundation of coffee houses on which to build for the future, a future which we believe has a long runway of new coffee house growth in both North America and around the world. In conclusion, we are encouraged by the momentum we are building through continued work on our Back to Starbucks plan. Our third quarter results validate our belief that human connection and a great customer experience can drive durable, profitable growth. We still have more to do. We're moving at pace, and we're focused on the work ahead. And with that, we are now ready to take your questions. David Tarantino: Congratulations on further progress on the plan here. Brian, my question relates to a question I've been getting from a lot of investors, which is how long can you keep up the same-store sales momentum that you're seeing currently? And I know the long-term plan calls for 3% annually, but I suspect you're aiming for something higher. So I guess, could you just give us your thoughts on where you are in the journey of recovering the sales volumes? And what are the building blocks to keep this type of momentum or something above the 3% level going for the next few years? Brian Niccol: Yes. Thanks, David. And -- to answer your question on the momentum, the good news for us is I think this is driven by just better operating practices. Thinking about the Green Apron Service model, meaning we now, I think, are staffed better. We think we have the right routines, the right coaching taking place so that we're giving better customer experiences for all of our customers every single day. And if you look at where the business was, there's still lots of space to add more transactions, both in the morning and in the afternoon. And we've made tremendous progress in both dayparts, but there still is a lot of room for growth. And then as you think about the innovation that we brought out, our marketing team, I think, has done a great job on bringing out relevant innovation, both in drinks, food and also merchandise. I think we're just getting started on that front as well. And so we are operating better on a day-to-day basis. And I think our customers are seeing it, feeling it, experiencing it. And our partners, I think, are becoming more and more consistent with the ability to execute the Green Apron Service experience. And I just know the business has more room for growth. And when you talk to the customers that have experienced it, they're responding positively. And I still think there is more to come on the innovation side of things, whether it's through our digital platforms or more of the traditional work that we've done on menu and marketing. David Palmer: Congrats on these results. So just really a follow-up on the daypart point that you were just making. I wonder how has the daypart growth been if you had to separate morning versus the afternoon, what's happened in the last year? And then also how you're thinking about it over the next year and maybe beyond? You've talked about the afternoon daypart being the next big opportunity. I would imagine maybe some of the throughput stuff has been an outsized benefit to the more compressed morning daypart. So any sort of ways that you're thinking about the opportunities on both those sides? And if you see maybe the baton being passed to the afternoon in terms of outsized growth and when? Brian Niccol: Yes. Thanks, David. So obviously, I think we said from the beginning on the Back to Starbucks strategy, we wanted to win the morning and then start creating the afternoon daypart. And what I'm happy to say is our partners in our stores have done just that. They have done a great job of executing great staffing, great deployment and then ultimately, I think, great experiences in the morning so that we win that ritual every morning. And in absolute transactions, it's probably been our biggest winner is the morning daypart. And then as you kind of move through the day, we continue to see transaction growth just not quite at the same level of what we're seeing in the morning. I think that's going to be a combination of 2 things to get the afternoon kind of going as well, which is going to be a combination of beverage and food and then also just getting better at our routines in the afternoon. So we're doing exactly what we wanted to set out to do from a strategy standpoint, win the morning, create the afternoon and break down any barriers we have that is preventing us from getting to great throughput in all the access modes, whether it's drive-thru, cafe, mobile order pickup or delivery. And we're seeing great progress in all those access points and really throughout the day with the biggest wins coming, obviously, in the morning, which is where we have the biggest bottleneck initially. Catherine Smith: Maybe I'll add on, David, really quickly. We mentioned it in the prepared remarks, but refreshers had a really great quarter, which we would expect, but that gives us a great occasion for that afternoon beverage. And so we're seeing people take no caffeine oftentimes in the afternoon. We're still seeing the base refresher with that minimal amount of caffeine. And then obviously, we're now starting to see some routinization in the morning with refreshers that have extra caffeine or the energy. And so I say that because that gives us a great platform along with our Matcha menu for the afternoon. And then you add on some of the tests we've been doing in food like the wraps starts to give us a really great occasion to expand that afternoon daypart. Andrew Charles: Brian, I'm curious what you make of what is going on in the coffee category where investors may not be thinking about just burger, chicken and pizza. Just it appears the category is just not zero-sum in nature. And just related to that, you guys talked about the opportunity in 2027 to slow development, step-up closures of underperforming stores. And I'm curious kind of why now at a time when the tide is clearly being lifted for Starbucks. Brian Niccol: Yes. Look, so first of all, really excited about the momentum we have in the business. Even as you look at how we exited the quarter, the thing that was great to see is the business kind of picked up yet again. So we're seeing really good things happen with the Starbucks business and then obviously, the coffee category. Your comment on new units, look, unfortunately, we did not have a great development strategy when you kind of go back 2 or 3 years ago. And it is just one of those things where we either did really difficult remodels on stores or we potentially put the wrong store in the wrong place. And so we're having to clean that up and fix that up. The good news is, as the business responds, it becomes more clear where you have the true problem stores. And I think I said this from the beginning, we're going to fix them, and then we're going to build the pipeline with the right stores that are going to be in the right locations. And as you mentioned, the good news is the category is strong, the Starbucks business is strong so that when you have these openings, there'll be really strong openings. So that's really the practice. And I think as a result, Starbucks will be in a much stronger position going forward. Sara Senatore: I guess maybe a similar bent. One is on refreshers, standout platform, but it seems like everybody has refreshers. So maybe you could talk a little bit about what customers are telling you about what distinguishes Starbucks and whether when other -- when large QSRs, for example, not beverage specialists, advertise, if that creates a halo for you? And I guess the follow-on is, does that -- any of that change as you pivot your growth strategy? I think very explicitly, you've talked about markets where maybe there are other coffee specialists, but Starbucks doesn't have a location. Does this competitive dynamic shift at all? Brian Niccol: Yes. So I think you're right. The good news is I think we're the original when it comes to refreshers. And I think the craft and the flavors and now the other ways that you can customize refreshers really is differentiating our refresher platform. And you heard me mention it in my prepared remarks, the growth has been really excellent. And I think it's been a platform, frankly, that we kind of got a little complacent on in the past, and now we are reinvigorating. And we're seeing a really positive response. And I think you heard Cathy mention this. The thing that's great to see is the way people are using refreshers, whether it's fully decaffeinated or whether it's fully boosted, those are the different occasions that people want refreshers, whether it's in the morning or the afternoon and whether you're young or old, the platform is resonating. I'm really excited that we're getting ready to go test sparkling. We're calling it Spritzers. So refreshers that have, like, spritzes. We've got those going in a couple of test markets. And most recently, we just added the opportunity to do blended. So you'll see us experiment with other ways to experience refreshers. And I think our point of difference, frankly, is the craft that we provide, the customization that we provide behind that craft. And then I think our team does a great job on getting to the delicious flavors that are relevant for the customer. So it's been a really strong platform for us. And over the last quarter, it really continued to perform despite all the activity you saw in the space. And I think that was kind of my going-in belief, which is if you're the category leader in the space, when other people start advertising in the space and you continue to execute really well, our plan is to get not only our fair share, but more than our fair share. And so that's really the mission of the team on this one. And then your question on how does it rethink kind of the total business? Look, I think what is definitely clear is there's a trend to cold. But cold beverages are still being executed with coffee, espresso and the customization that you'd expect around those traditional coffee drinks. And then obviously, we're seeing the refresher business play a really nice role from morning to afternoon. And I think you'll see that continue to be a strong tool for us in the afternoon daypart as we grow that daypart and you see the competition really heating up in that space as well. So I love the position we're in. I'm really excited about the innovation we've got coming. And the Refreshers platform, our belief was we had a big platform with the opportunity to innovate against it, and you're seeing us do that now. Brian Harbour: I'm curious how much you think kind of the uplifts are helping you right now in the U.S.? And I guess, how you're measuring the success of that on a per store basis? And I guess just relatedly, when you talk about maybe some more closures, I mean, what are some of the characteristics of those stores? Brian Niccol: Yes. So the uplifts have actually been really terrific performers for us. And we're seeing the business respond, frankly, which has been our in-going hypothesis that it would benefit kind of all day long, but it would also benefit all access points because people just feel better about even doing their mobile order pickup when they go to a coffee house versus a place that maybe wasn't up to our Starbucks standard. So we're seeing them delivering transactions. We're just seeing them deliver on being a positive on the brand, just perception and how people feel about the brand. And so we're going to continue to accelerate that uplift program and really get all our coffee houses up to the Starbucks standard and the experience that people would expect from Starbucks as well as the experience that our partners want to provide. So it's also very powerful for the experience that we provide because our partners are truly proud now of their coffee house. Your question on some of the stores that will -- we may decide we have to close. Look, it's really about performance and location and sometimes where the actual asset is from a standpoint of remodeling versus will we be better off just building a new store. So it's not a question of whether or not we think Starbucks can work in the trade area. It's more to do with, is this the right representation of Starbucks? And are these the economics that, frankly, Starbucks should earn. And if the answers aren't yes, then you know what, we're being honest with ourselves and saying we're going to address the problem now, and we'll build the right Starbucks in that trade area. So I think this is just good hygiene. Catherine Smith: Brian, maybe I'll add a little bit more on uplifts just for a little bit more color, too. What we're seeing -- if you think back a quarter, we were a little over 300 or so stores or I think, coffee houses that have been uplifted. So that means we did north of 650 this quarter. And so we've got, obviously, early on that entire population. What we're seeing though is what Brian said, which is across all formats, all channels, all dayparts, all urbanities, both cafes and drive-thrus, we're seeing a positive halo. And I think that all just puts the brand in a much stronger position. And I think we shared in the prepared remarks, our brand health metrics are at kind of 5-year highs. So I think all of that goes together with that great full customer experience, and we're seeing it with the uplifts. And then the other thing is they continue to be a really good return on investment. My last plug is the team is doing a great job of closing -- of not closing stores. They do the coffee house uplifts overnight, so we don't change the routine for our customers. And so the fact that we don't take a coffee house offline, I think, is incredibly important. And they're a very low level of investment, as we've shared, $150,000 on average. So it's a great return. So I think all of that just to say we're really excited. Danilo Gargiulo: So what's your assessment on the same-store sales and operational performance of your stores versus those of the licensed stores in North America, right? And so what are some of the actions within your control to close that gap? Brian Niccol: Yes. So I just want to make sure I got it. So you're asking the company store same-store sales growth performance versus licensed stores, same-store sales growth performance and what differences are we seeing there? So what I would tell you is the good news is we're seeing our licensed stores really have kind of a great quarter as well, primarily led by the travel category. But in general, what's happening in our licensed business is we're putting the same rigor in place that we've got in our company stores. So we're putting in place the Grow Report, obviously, tweaked to recognize that it's a licensed model. We're also putting a lot of, I would say, specificity around what the expectations are for a Starbucks experience because our goal is there should be no real difference between a Starbucks experience at a company-owned store or a Starbucks experience at a licensed store. And so the good news is we're seeing more and more examples where that truly is the case and fewer and fewer examples where we've got a big discrepancy. So the comp performance was really good in licensed stores as what we saw in our company stores, and we continue to see great progress. And obviously, we're working to continue to make sure that the Starbucks Experience, there really is no difference between which outlet you experience, whether it's company-owned or licensed. Zachary Fadem: So first, a housekeeping question on the impact of coffee house initiatives like extended hours, closed stores and delivery and how these factored into the Q3 comp relative to your brand initiatives? And then second question, unrelated on tariff refunds and whether you're anticipating more in Q4 and to what extent the guide contemplates anything there? Catherine Smith: So let me start with the first one and with regards to the impacts of things like extended hours, actually pretty limited. Let me back first up with the 7.9% comp that we drove, about half of it or a little bit less than half of it was due to closures, sales transfer, delivery growth. The rest of it is all that great store performance and menu and innovation. So let me start there. The hours of operation piece was actually very small, just a couple of basis points. So really, really small. Zachary Fadem: Refunds and whether you're anticipating any more in Q4 in the guide? Catherine Smith: Sorry, thank you. We're excited about the -- first off, the gross -- or the operating income margin expansion we saw in the quarter. And we saw that even without the tariff refund. As we shared, the year-to-date performance is probably the right way to look at our product and distribution costs or COGS because that pretty much nets the impact of increased tariffs and then obviously, the refunds. We believe we've largely gotten the refunds we're entitled to at this point. And so I think that's probably a good place to anchor is that year-to-date performance. John Ivankoe: First, a question, and then I think just a quick follow-up. First on the question, in terms of Green Apron Service, did we absolutely nail it in terms of labor hours in terms of not only your current traffic, but potentially increased traffic going forward? In other words, could we expect the number of labor hours to stay relatively steady or perhaps have some efficiency opportunity as traffic has grown? So that's the question. And then secondly, Brian, I think I heard in your prepared remarks, 24-hour operating model. Does that mean some Starbucks stores could actually be open 24 hours? And I guess, I know that's not an overnight kind of decision. So over time, how much do you think kind of an average extended hours could potentially mean to the Starbucks U.S. system when fully rolled out and optimized? Brian Niccol: Yes. Thanks for the question. Look, I think our operators are doing a great job on managing the labor schedule and making sure that we are providing great experiences for the business that we're receiving. I still think there is opportunity for us to get even more growth going in the morning and in the afternoon. And obviously, in the morning, that's where you could really see more efficiency gains out of the labor that we've got there at peak. And then as you kind of move through the day, I think we're going to start to see the same opportunity. And eventually, we'll earn our way into having the additional hours necessary to match the growth of the business. So I think the team has done a great job of managing the labor hours so that we meet the demands of the business and that we aren't capping the growth off. That's really important to all of us is we still think there's more room for growth in the morning. We think there's more growth in the drive-thru. We think there's more growth in mobile order pickup. So -- and that's true in the morning and the afternoon. And we can just see it because we've got these different cohorts of stores that demonstrate what's possible. So very optimistic about where we go from here and how we take advantage of the new Green Apron Service model and the labor that comes with it. And then on your second question, I think around 24 hours, I think you're referring to our supply chain comments that I made, where what we want to do is make sure that we now have a system that can create pull-through the supply chain and get replenishment done within 24 hours. As you mentioned, we do have a handful of stores that happen to also be open 24 hours. But really, what I was talking more about is I'd like to be able to replenish stores within 24 hours so that we're never out of stock. And then also, hopefully, we can shrink the back of house and have then the right inventory at the right location at the right time, and we'll just be much more efficient in the whole entire supply chain process. So that's really what we're driving towards. And then obviously, it'd be great if the demand proves itself that we should have more stores open 24 hours. But right now, that's not a focus area. The focus area is more on the supply chain. Karen Holthouse: Congratulations on continued momentum. This is Karen Holthouse on for John. Just curious what marketing spend looked like year-over-year. And as you're thinking about the sort of shift to more being part of the conversation and part of culture, do you think there's still room from here for advertising to grow in terms of a percent of sales investment and/or just continuing to optimize more like the media mix side of things? Brian Niccol: Yes. Look, the team has done a great job with the marketing budget. I think we spend a little bit more than 2% of sales on marketing. And obviously, as the business grows, the good news is we're not capping that spending. So -- and we're not seeing diminishing returns out of our spending. So the team and Tressie are doing a great job of making sure that we're investing in the places where we believe we can drive transactions, drive the brand, build that loyalty and love and make sure people understand what Starbucks stands for. And I think culturally, we've been on the money. And I think the communication, frankly, is at some of its best moments the brand has had in a long time. So I love the way they're using the dollars. The budget will obviously continue to grow with the business as we grow. And the team is going to be accountable for making sure that they get great returns for those dollars that we spend. And you know what, they rise to the occasion every single time we have a conversation about it. So I think we're in a really great place, and I'm really excited about the plans that we have for the balance of the year as well as I look at 2027. Margaret-May Binshtok: I just wanted to ask a little bit about digital menu boards. Where does the penetration stand today? And what are you seeing specifically on the afternoon daypart performance in stores that have them? And what, I guess, that menu board can allow you to do for the afternoon? Brian Niccol: Yes. So I think digital menu boards now are in -- I think by the time we get to September, we'll be in like 80%, 90% of our stores. And the thing that we've been doing right now is you'll see us dayparting the menu boards, which has been great. And I think that is helping build our afternoon daypart because we're doing a better job now of merchandising the offerings that we have in the afternoon. And the team continues to fine-tune how we use those digital menu boards to better drive the daypart communication. And it's going to be really great once we have the entire system on the digital menu boards going forward. So -- and with every uplift, we make sure we put in those digital menu boards as well as then just the digital menu board program that we have in place. So the marketing team, I think, is taking advantage of the technology and the ability to then daypart it accordingly. Logan Reich: Brian, I just want to follow up on the remodels, obviously tracking ahead of schedule in '26, and you pointed to acceleration in '27. Just trying to get a sense of where the limit on the remodels you guys can do? Any sense on when that could be completed across the whole system and just what the potential acceleration could be in '27? Brian Niccol: Yes. So look, our goal is to try and get it done as fast as we can. Obviously, we want to balance the speed at which we do it given the other areas that we're also investing in. But I think you're going to see a pretty good step-up from '26 to '27. And then obviously, our goal is to try and get it done as quickly as possible from there. So we're building the capability in order to do more than we did this year, and then we'll see how we scale that up because I also don't want to go fast and be sloppy. I want to make sure that we move quickly and do it with excellence. So that's kind of the balancing act that we've got to make sure we execute here because they're working really well. And the last thing we want to do is jeopardize quality because you go and amp up the speed to a level where you don't get the quality performance that we want. So meaningful step-up in '27, and we'll see how it goes from there. And then we'll figure out how much faster we can go from there and hopefully complete all of them in a timely fashion. Stephen McManus: I had a question on delivery. So as that scales at a higher penetration rate, how should we think about incrementality and the trade-off versus in-store visits? And is there any color you could share around channel margin implications, that would be great. Brian Niccol: Yes. So right now, there's no trade-off on margins. And we have yet to see any meaningful cannibalization from the delivery channel. So we're really excited about it. And pretty soon, we'll have it also in our app with obviously a white label partner, which I think will also make the platform that much more attractive because then you'll be able to get rewards or Stars as part of the program, which today, when you do delivery, you aren't participating in the Stars program. So we think there's still a lot of upside in it. And right now, there's no trade-off from a margin standpoint. Operator: And ladies and gentlemen, that was our last question. I will now turn the call over to Brian Niccol for closing remarks. Brian Niccol: All right. Well, thank you, and thanks, everybody, for taking the time. Very proud of our results on Q3. I think as I mentioned before, when we put together the Back to Starbucks strategy, it really was built on this simple idea that was kind of the founding idea of Starbucks, which is extraordinary coffee, terrific human connection and obviously done in a way where people can have an experience that they want to come back for. And so I think we're proving that, that is playing out as a point of difference for Starbucks and also that the Back to Starbucks program can deliver results in a meaningful way. So I think we're in the process of building the Starbucks that we believe we should be and a Starbucks that's built for performance and a Starbucks that's built for consistency of that performance. And we've got a clear plan. The team is focused on this plan. I think we have tremendous opportunity in front of us, and I'm excited about what's next. And I'm really excited about where we grow from here because I think the foundational elements that we put in place really set the Back to Starbucks plan up for enduring performance so that quarter after quarter, we can talk about the great customer experiences and the great results that come with it. So thank you, everybody. Have a great day and look forward to continuing to talk business with each and every one of you. Take care. Operator: This concludes Starbucks' Third Quarter Fiscal Year 2026 Conference Call. You may now disconnect. 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Interested in Dutch Bros Inc.? Here are five stocks we like better. Strong Q2 performance: Dutch Bros reported 32% revenue growth to $551 million, with adjusted EBITDA up 28% to $114 million and company-operated same-shop sales rising 8.3%. Management cited transaction growth, food adoption and menu innovation. 2026 outlook raised: The company now expects $2.1 billion-$2.13 billion in revenue, $385 million-$390 million in adjusted EBITDA and at least 185 new shops, despite anticipated coffee-cost and occupancy pressures. Expansion and new offerings accelerate growth: Dutch Bros opened 48 shops in Q2, acquired rights to 31 Phoenix-area locations and plans to convert up to 65 Salad and Go sites. Its new Myst Energy Refreshers will become a permanent menu item, while Rewards accounted for more than 73% of transactions. Starbucks Builds Sovereign AI to Cut $400 Million in Software Costs Dutch Bros (NYSE:BROS) reported second-quarter 2026 revenue growth of 32% and raised its full-year outlook, citing transaction gains, food-program adoption, menu innovation and continued new-shop productivity. Total revenue for the quarter ended June 30 reached $551 million, while adjusted EBITDA increased 28% year over year to $114 million. Adjusted earnings per share were $0.33, compared with $0.26 in the prior-year quarter, CFO Josh Guenser said on the company’s Aug. 5 earnings call. → 3 Drone Stocks That Should Soar After the Summer Slump Dutch Bros Q1 Earnings: The Newest Starbucks Rival Faces Its First Big Reality Check Company-operated same-shop sales rose 8.3% during the quarter, including 3.4% transaction growth. Systemwide same-shop sales increased 5.8%, with transactions up 1.7%. CEO and President Christine Barone said the quarter marked the company’s eighth consecutive quarter of transaction growth and its 13th straight quarter of positive comparable sales. Dutch Bros raised its 2026 outlook following its year-to-date performance and the acquisition of a Phoenix East Valley franchisee. The company now expects total revenue of $2.1 billion to $2.13 billion, representing 28% to 30% year-over-year growth, and adjusted EBITDA of $385 million to $390 million. System same-shop sales growth is projected at 5% to 6% for the full year, with the company trending toward the midpoint of that range. Third-quarter system same-shop sales are expected to increase about 4% to 5%. The company expects to open at least 185 system shops during 2026. Capital expenditures are projected at $350 million to $370 million. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth 2026 Food Inflation Outlook: This ETF Could Outperform Guenser said the third-quarter comparable-sales outlook reflects more difficult transaction comparisons, lower effective pricing and the anniversary of the food-program rollout that began in the third quarter of 2025. He said pricing taken during the year will contribute less than one percentage point to ticket growth in the second half after another price increase rolled off in early July. The company expects higher coffee costs to continue affecting results in the back half of the year. Its updated outlook includes roughly 60 basis points of full-year cost-of-goods pressure, including food-program costs. The midpoint of adjusted EBITDA guidance assumes approximately 20 basis points of year-over-year margin pressure from coffee and occupancy costs, partly offset by leverage in adjusted SG&A. → Jersey Mike's Serves Fresh Gains After IPO Stumble Dutch Bros opened 48 system shops in the second quarter and said it now has about 90% of the pipeline needed to reach its goal of 2,029 shops in 2029. Barone said new-market results in Chicago, Atlanta, Charlotte and Tampa have supported management’s confidence in the national expansion strategy. The company’s first greater Chicago shop had been pacing toward approximately $4 million in volume, while its Melrose Park location is pacing toward approximately $7 million, according to Barone. The Melrose Park opening also established a company opening-day record. Dutch Bros entered its 26th state, Mississippi, in July. Last week, Dutch Bros completed the purchase of franchise rights and assets for 31 Phoenix-area locations, including one location under development, for $63.5 million. The company expects the deal to provide about $25 million in net incremental revenue and approximately $5 million in incremental adjusted EBITDA for the remainder of 2026, with the revenue figure including a roughly $5 million reduction in franchise and other revenue. The company also agreed to acquire real estate and related site assets for up to 65 Salad and Go locations in Arizona, Nevada, Oklahoma and Texas. Dutch Bros expects to close that transaction during the current quarter, subject to approvals and customary conditions, with conversions expected in 2027. Guenser said the locations are comparable in size to Dutch Bros shops and could offer relatively straightforward conversions. Dutch Bros completed the rollout of its new food program at roughly 750 system shops by the end of the second quarter, ahead of schedule. Barone said the offering has helped the company serve more morning occasions and has produced quick food-attachment gains in shops as the program launches. Food rollout to franchise locations is expected to begin next quarter. Barone noted that about 300 shops will not be able to offer the hot-food program and that these locations are disproportionately within the franchise system. The company also introduced Myst Energy Refreshers during the quarter, a plant-powered energy-drink platform that complements its Rebel energy lineup. Dutch Bros said Myst drove trial through a Coffee Fill-A-Tray event, increased energy’s overall sales mix and generated retention rates ahead of recent limited-time-offer benchmarks. The company has decided to add Myst permanently to the menu. Barone said Myst demand has been strongest in the afternoon, although the product is also gaining morning occasions. She said customer demographics are broadly similar to Rebel’s, while the product has also drawn some demand from lemonade purchases. Digital engagement continued to rise, with more than 73% of transactions flowing through Dutch Rewards at quarter-end. Registered members per shop have increased more than 50% over the past three years, Barone said. Order Ahead represented about 16% of transactions. Management attributed the rewards program’s contribution to comparable sales to increased data segmentation, personalized offers and new engagement capabilities, including customer “streaks.” Company-operated shop revenue rose 34% to $510 million, while company-operated shop contribution increased 32% to $156 million. Shop contribution margin was approximately 31%. Beverage, food and packaging costs represented 26.1% of company-operated shop revenue, up 80 basis points year over year. Labor expense was 25.4% of shop revenue, improving 120 basis points due primarily to sales leverage. Occupancy and other costs increased 50 basis points to 16.3% of revenue, reflecting higher rent as Dutch Bros shifts more of its portfolio toward build-to-suit leases. The company ended June with approximately $699 million of total liquidity, including $269 million of cash and cash equivalents. Average capital expenditures per shop were approximately $1.4 million in the second quarter. Barone said the company is working to improve throughput through labor deployment, shop layouts, equipment and operational processes. Dutch Bros also introduced a Vibe Check Scorecard during the quarter to provide leaders with visibility into employee turnover, customer feedback, staffing and business performance at the shop level. Dutch Bros Coffee, trading on the NYSE under the ticker BROS, is an American drive-through coffee chain known for its quick-service model and community-focused brand. Founded in 1992 by brothers Dane and Travis Boersma in Grants Pass, Oregon, the company began as a single coffee stand and has since expanded its footprint across numerous U.S. markets. Dutch Bros specializes in handcrafted espresso drinks, drip coffee, cold brew, energy drinks, smoothies, teas, and a variety of signature “Dutch Freeze” and “Dutch Frost” blended beverages. The company operates a mix of company-owned and franchised locations, placing a strong emphasis on speed and customer engagement. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Dutch Bros Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Starbucks Corporation SBUX raised its fiscal 2026 outlook after stronger comparable sales and margin performance in the third quarter. The higher targets offer the clearest test yet of whether the company’s turnaround is becoming financially durable.Better traffic, ticket growth and operating leverage support the recovery case. Labor spending, restructuring charges and uneven cost comparisons still leave the company with a demanding execution task. Management now expects U.S. comparable sales growth slightly above 6% for fiscal 2026, up from its previous forecast of at least 5%. Global comparable sales growth is projected to approach 6%, while fourth-quarter U.S. comparable sales are expected to increase at least 6.5%. Starbucks Corporation price-consensus-chart | Starbucks Corporation Quote Starbucks also raised adjusted earnings guidance to $2.55-$2.65 per share from $2.25-$2.45. Consolidated net revenues are projected to be flat to slightly higher, and non-GAAP operating margin is expected to exceed 11%. Delivering those targets would show that improving demand is translating into a more visible earnings path. Third-quarter global comparable sales increased 7.9%, driven by 4.2% transaction growth and 3.5% ticket growth. Management said the gains extended across income groups, dayparts and access points, while delivery and food attachment supported North America’s 8.1% comparable-sales increase.This broader demand base matters because a recovery led by transactions and customer engagement may be more sustainable than one driven mainly by price. Dutch Bros Inc. BROS, a drive-thru beverage operator and franchisor, also competes for beverage occasions, while McDonald’s Corporation MCD uses a largely franchised global restaurant model. Both provide relevant benchmarks as Starbucks works to improve traffic and operating consistency. GAAP operating margin expanded 60 basis points year over year to 10.5% in the third quarter. Non-GAAP operating margin increased 430 basis points to 14.4%, supported by sales leverage, lower inflation, tariff refunds and lower product, distribution, depreciation and administrative expenses.Not all of the improvement should be treated as recurring. Tariff refunds helped the quarter, and the China business transition changed the reported revenue and margin mix. More repeatable gains will depend on maintaining transaction growth while converting higher sales into operating profit. Labor investments, unfavorable product mix and restructuring costs continued to offset part of the operating improvement. Restructuring and impairment expenses increased to $302.6 million from $20.8 million a year earlier as Starbucks reshaped its support organization, facilities and store portfolio.Commodity and tariff volatility add another layer of uncertainty. Management indicated that reciprocal tariff refunds largely offset related tariffs during the first nine months, making some third-quarter cost comparisons less representative of underlying operations. Sustained margin conversion will therefore be a key indicator in coming periods. The raised outlook strengthens the case that Starbucks’ earnings recovery is progressing, but it does not remove the need for consistent execution. Traffic must remain healthy, cost savings must offset turnaround spending and margin gains must become less dependent on temporary benefits.The stock currently carries a Zacks Rank #3 (Hold). It also has a Growth Score of A, Momentum Score of A, VGM Score of B and Value Score of D. The favorable growth and momentum readings reflect improving operating and estimate trends, while the weaker value reading suggests that durable earnings delivery is important to support the stock’s premium valuation. The combination favors a measured view rather than an aggressive call. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX) : Free Stock Analysis Report McDonald's Corporation (MCD) : Free Stock Analysis Report Dutch Bros Inc. (BROS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Starbucks Corporation SBUX used its fiscal third-quarter call to argue that the Back to Starbucks plan is producing a more durable recovery in traffic, service and margins. The company raised its full-year outlook, though management also stressed that store portfolio cleanup, labor investments and consumer variability still require disciplined execution. Starbucks reported non-GAAP earnings of $0.85 per share, above the Zacks Consensus Estimate of $0.66. Revenues of $9.32 billion fell short of the $9.44 billion consensus estimate. Starbucks Corporation price-consensus-eps-surprise-chart | Starbucks Corporation Quote Chairman and chief executive officer Brian Niccol highlighted 7.9% global comparable-store sales growth, led by a 4.2% increase in transactions. Non-GAAP operating margin expanded 430 basis points to 14.4%. Executive vice president and chief financial officer (CFO) Cathy Smith raised fiscal 2026 non-GAAP earnings guidance to $2.55-$2.65 per share. Starbucks now expects U.S. comparable-store sales growth slightly above 6%, global growth near 6%, flat to slightly higher revenues and non-GAAP operating margin above 11%. Niccol said Green Apron Service has become the operating foundation of the turnaround by improving staffing, routines, coaching and accountability. Two-thirds of North American company-operated coffeehouses now score at least four shots in the GROW system. Target service times were achieved across access points during the quarter despite transaction growth. Food availability approached 99%, about 10 percentage points better than a year earlier. Coffeehouse leadership stability also improved, with the share of North American leaders in role for at least two years rising about seven points. Niccol tied that continuity to better execution and stronger store performance. Niccol told an Evercore ISI analyst that morning transactions remained the largest growth driver, while afternoon demand offers further runway. Management plans to build that daypart through beverages, food and tighter operating routines. Refreshers delivered double-digit U.S. revenue growth, while S’mores beverages became the strongest summer coffee limited-time launch in several years. Starbucks Rewards reached 35.8 million active U.S. members. Niccol said digital menu boards were on track to reach 80-90% of stores by September, enabling more daypart-specific merchandising. He also told a BNP Paribas analyst that delivery has shown no meaningful cannibalization or margin trade-off. Starbucks completed more than 1,000 North American coffeehouse uplifts and raised its fiscal year-end target to at least 1,500. Management plans a further acceleration in fiscal 2027. Responding to Morgan Stanley, Smith said the upgrades average about $150,000 and are generally completed overnight without closing stores. Early results show positive transaction effects across formats, channels, dayparts and customer groups. A TD Cowen analyst pressed management on closures. Niccol said stronger system performance is making weak locations easier to identify, while modest North American company-operated unit growth may persist through fiscal 2027 as the company fixes or replaces underperforming assets. Smith said sales leverage, cost savings and lower inflation supported margin expansion, while tariff refunds amplified the quarter. North American margin still improved more than 100 basis points excluding those refunds. The CFO said Starbucks remains on track for $2 billion of gross savings through fiscal 2028. Consolidated general and administrative expenses declined about 20%, and coffee cost pressure should become largely immaterial to year-over-year comparisons in the fourth quarter. Niccol positioned the China joint venture as part of a capital-light international model, with about 90% of the portfolio now licensed. Smith said China contributed $53 million of quarterly revenues and an operating margin above 100% under the new structure. Management’s tone was confident but measured. Niccol said the company still has work ahead, with priorities centered on throughput, service consistency, afternoon occasions and coffeehouse quality. The next phase includes faster replenishment, fiscal 2027 technology modernization and stricter development discipline. Starbucks is seeking to preserve traffic momentum while improving store economics and building a more scalable licensed international platform. SBUX carries a Zacks Rank #3 (Hold). Its Growth Score of A, Momentum Score of A and VGM Score of B indicate stronger growth and momentum characteristics, while the Value Score of D points to a less favorable valuation profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Style Scores are designed to complement the Zacks Rank, with A and B scores generally more favorable than lower grades. The current signals are mixed rather than decisive, and the Zacks Rank can change as analyst estimates are revised after the reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

For the quarter ended June 2026, Starbucks (SBUX) reported revenue of $9.32 billion, down 1.4% over the same period last year. EPS came in at $0.85, compared to $0.50 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $9.44 billion, representing a surprise of -1.22%. The company delivered an EPS surprise of +28.79%, with the consensus EPS estimate being $0.66. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Starbucks performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Total Stores: 41,304 versus the five-analyst average estimate of 39,717. Comparable store sales - YoY change: 7.9% versus the five-analyst average estimate of 6.4%. Comparable Store Sales - International - Sales Growth: 5.7% compared to the 4.4% average estimate based on five analysts. Comparable Store Sales - North America - Sales Growth: 8.1% versus the five-analyst average estimate of 6.5%. Net Revenues- North America: $7.4 billion compared to the $7.29 billion average estimate based on four analysts. The reported number represents a change of +6.8% year over year. Net Revenues- International: $1.32 billion compared to the $1.53 billion average estimate based on four analysts. The reported number represents a change of -34.2% year over year. Net Revenues- Company-operated stores- North America: $6.75 billion versus $6.64 billion estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +7.5% change. Net Revenues- Other- International: $9.9 million versus $15.85 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a -47.3% change. Net Revenues- Company-operated stores: $7.51 billion versus the five-analyst average estimate of $7.52 billion. The reported number represents a year-over-year change of -3.9%. Net Revenues- Licensed stores: $1.2 billion compared to the $1.24 billion average estimate based on five analysts. The reported number represents a change of +8.6% year over year. Net Revenues- Other: $615.8 million versus $624.43 million estimated by five analysts on average. Compared to the year-ago quarter, this number represents a +14.5% change. Net Revenues- Channel Development: $587.9 million versus the four-analyst average estimate of $558.27 million. The reported number represents a year-over-year change of +21.5%. View all Key Company Metrics for Starbucks here>>> Shares of Starbucks have returned +0.9% over the past month versus the Zacks S&P 500 composite's +1.9% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Starbucks Corporation? Here are five stocks we like better. Starbucks reported strong third-quarter results: Global comparable sales rose 7.9%, diluted EPS increased about 70% year over year to $0.85, and North America comparable sales climbed 8.1%, led by higher transactions. Profitability improved significantly: Consolidated operating margin expanded 430 basis points to 14.4%, supported by sales leverage, cost savings, lower inflation and tariff refunds. The company also repaid approximately $1.8 billion in debt after restructuring its China operations. Starbucks raised its fiscal 2026 outlook, including adjusted EPS guidance of $2.55 to $2.65 and full-year operating margin above 11%. China is now operated through a 40%-owned joint venture, while the company plans to accelerate coffeehouse “uplifts” and continue its turnaround strategy. Starbucks Builds Sovereign AI to Cut $400 Million in Software Costs Starbucks (NASDAQ:SBUX) reported third-quarter fiscal 2026 results that management said reflected continued progress in its “Back to Starbucks” turnaround plan, including a fourth consecutive quarter of positive global comparable-sales growth and a second straight quarter of operating-margin expansion. Consolidated net revenue totaled $9.3 billion, down 1% from the prior year primarily because the company transitioned its China retail operations to a joint-venture licensing structure during the quarter. Global comparable sales rose 7.9%, led by transaction growth of more than 4%, while diluted earnings per share increased about 70% year over year to $0.85. → This Tiny AI Supplier Could Be More Important Than the Chipmakers Pushing the Edge: Super Micro Computer Reboots the AI Landscape “Our third quarter results and performance this year give us the confidence to raise our full year 2026 guidance,” Chairman and Chief Executive Officer Brian Niccol said. North America revenue was $7.4 billion, and comparable sales increased 8.1%. U.S. comparable sales rose 7.9%, with transactions increasing 4.2% and average ticket growing 3.6%. Chief Financial Officer Cathy Smith said pricing accounted for less than one percentage point of ticket growth. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? These 3 Stocks Offer Investors Exposure to the Functional Beverage Boom Management attributed the U.S. results to broad-based growth across dayparts, income levels and customer access points. Food attachment reached a third-quarter record in U.S. company-operated stores, with the strongest gains occurring in the afternoon, according to Smith. Delivery, innovation-led drink modifications and food attachment supported average-ticket growth. Starbucks had 35.8 million active U.S. Starbucks Rewards members over the prior 90 days, up both sequentially and from a year earlier. Niccol said the revised rewards program is encouraging members to advance through its membership tiers, while Smith said engagement and stored-value card reload amounts have exceeded management’s expectations. → Innovative ETF Strategies That Are Paying Off This Summer The North America store base ended the quarter at 18,371 coffeehouses. Starbucks added 27 net new company-operated stores but recorded 41 net closures in its licensed portfolio. Licensed revenue was roughly flat year over year, while U.S. licensed stores posted positive systemwide comparable sales, led by travel and leisure locations. Consolidated operating margin expanded about 430 basis points from the prior year to 14.4%, marking the second consecutive quarter of margin expansion. North America operating margin increased about 280 basis points year over year, its first year-over-year increase since the first quarter of fiscal 2024. Smith said the margin gains were driven by sales leverage, cost savings efforts, lower inflation and reciprocal tariff refunds. She cautioned that the refunds largely offset tariffs incurred during the first three quarters of fiscal 2026, making the year-to-date product and distribution cost rate of 32.3% a more normalized measure than the third-quarter rate of 30.3%. Even excluding tariff refunds, Smith said consolidated and North America margins expanded from the prior year. Consolidated general and administrative expenses fell approximately 20%, reflecting cost-saving actions, the deconsolidation of the China business and the comparison with prior-year leadership event expenses. The company repaid about $1.8 billion in debt using part of the proceeds from the China transaction. Leverage declined to 2.9 times, which Smith said supports Starbucks’ investment-grade profile, business investment plans and dividend. Niccol said the company’s Green Apron Service operating model has improved staffing, coaching, accountability and store execution. Two-thirds of North American company-operated coffeehouses reached four or more “shots” under Starbucks’ internal GROW reporting and ranking system, up more than five percentage points from the prior quarter and more than 40 points since the system launched last October. Starbucks also reported that average service-time targets were achieved across access points during the quarter, despite transaction growth. Food availability approached 99%, roughly 10 percentage points above the level reported a year earlier. The company completed more than 1,000 North American coffeehouse “uplifts” in the third quarter, reaching its fiscal 2026 target ahead of schedule. These projects add seating, warmth and other design elements at an average investment of about $150,000 per location, according to Smith. Management said early results showed transaction gains across dayparts, formats and customer segments. Starbucks now expects to complete at least 1,500 uplifts by the end of fiscal 2026 and plans to accelerate the effort in fiscal 2027. Niccol said the company will balance speed with quality as it expands the program. International company-operated comparable sales rose 5.7%, supported by performance in Japan and the United Kingdom. Japan, now Starbucks’ largest international company-operated market, benefited from innovation associated with its 30th anniversary, including nostalgic beverages and marketing, Smith said. International revenue was $1.3 billion and operating income was $300.9 million. Starbucks deconsolidated its China retail business beginning in the third quarter, reflecting its 40% joint-venture economics through income from equity investees. China contributed $53 million in reported international revenue during the quarter, and its reported operating margin exceeded 100% because of the licensing structure. About 90% of Starbucks’ international portfolio is now managed through a licensed structure. Management said it remains confident the China joint venture can support sustainable growth and ultimately reach up to 20,000 coffeehouses over time. The international portfolio ended the quarter with 22,933 coffeehouses, including 189 net new openings. Starbucks raised its outlook for fiscal 2026, projecting U.S. comparable-sales growth of 6.5% or better in the fourth quarter. That outlook implies full-year U.S. comparable-sales growth of slightly more than 6% and global comparable-sales growth nearing 6%. Consolidated revenue is expected to be flat to slightly higher year over year, reflecting the China structure change. Consolidated operating margin is expected to exceed 11% for the full year. Adjusted earnings per share guidance was raised to a range of $2.55 to $2.65. Starbucks maintained its outlook for approximately 600 to 650 net new coffeehouse openings in fiscal 2026. Management said North American company-operated unit growth may remain modest through fiscal 2027 as Starbucks identifies and addresses underperforming locations. Niccol said potential closures would be based on store performance, location quality and whether a remodel or a new location would provide better economics, rather than a lack of confidence in a trade area. “We’re seeing really good things happen with the Starbucks business,” Niccol said, adding that the company sees further opportunity to grow traffic in both the morning and afternoon dayparts. Starbucks Corporation is a global coffeehouse chain and roaster that operates, licenses and franchises coffee shops and related retail businesses. Founded in Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker, the company grew from a single store focused on whole-bean coffee and equipment into a broad consumer-facing brand. Howard Schultz, who joined the company later and served in senior leadership roles, is widely credited with transforming Starbucks into a mass-market specialty coffee retailer and expanding its footprint internationally. Starbucks' core activities center on the retail sale of hot and cold specialty beverages, whole-bean and packaged coffees, teas and ready-to-drink products, along with complementary food items and merchandise such as mugs and brewing equipment. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Starbucks Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.