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Global comparable store sales rose 7.9% as China retail converted to a licensed JV cut reported revenue 1%
grew for a third straight quarter, up 7.9% globally. fell 1.4% to $9.3B as the China retail business converted to a , while expanded 0.6 points to 10.5% and rose 85.7% to $0.91 on the year-ago low base. The underlying business is recovering, but the reported top line now reflects a smaller China footprint.
Key takeaways
Global rose 7.9% (4.2% transactions, 3.5% ticket), the third consecutive quarterly increase after four quarters of declines through FY2025, with U.S. up 7.9%.
Consolidated fell 1.4% to $9,322.7M, as a $776M drop from converting China retail to a was partially offset by the gain.
expanded 0.6 points to 10.5%, helped by sales , lower inflation, and , partly offset by higher restructuring costs and labor investments.
Section summaries
Management's Discussion and Analysis
Q3 FY2026 consolidated revenue fell 1% to $9.3B on China JV conversion, but global comparable store sales rose 7.9% and operating margin expanded 60 bps to 10.5%.
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Consolidated net revenues decreased 1% to $9.3B, as a $776M drop from converting China retail to a licensed JV was partially offset by a 7.9% global increase.
rose 85.7% to $0.91 and rose 87.2% to $1,045.3M , against Q3 FY2025's $0.49 and $558.3M depressed by costs and coffee inflation.
International fell 34% to $1.3B from the China JV conversion, but its expanded 550 to 19.1% as the licensed model improved profitability.
The company used $1.3B of China divestiture proceeds to senior notes, cutting 19.2% to $11.8B and lifting cash 125.2% to $3,449.8M sequentially.
North America grew 7% to $7.4B on 8.1% and its expanded 30 to 13.6%.
What changed
Q3 FY2026 global rose 7.9%, confirming the Q2 FY2026 6.2% gain held and extending the reversal first flagged after Q1 FY2026's 4% increase ended four quarters of declines.
North America expanded 30 to 13.6% after the 170 bps Q2 contraction to 10%, though labor and coffee inflation persist as earlier filings warned.
The China joint venture with Boyu Capital closed this quarter via the licensed JV conversion, removing China retail from reported and producing the $266M prior tax assertion's effect on International margin now up 550 to 19.1%.
Restructuring charges continued toward the ~$230M FY2026 guide; Q3 costs rose enough to offset the Q2 drop that had lowered Q2 charges by $91M versus Q1's $88M.
No share repurchases resumed in H2 against the earlier watch item, but $1.3B of debt was repaid from China proceeds, cutting to $11.8B from $14.6B at FY2025 close.
Risk factors were restated with no material change from the FY2025 10-K, carrying forward unionization, ESG mandates, and cybersecurity as unchanged.
What to watch
Q4 FY2026 global to confirm the 7.9% gain holds beyond three positive quarters
Remaining restructuring charges toward the ~$230M FY2026 guide after Q1's $88M and Q3's higher costs
North America after the 30 Q3 expansion to 13.6% as labor and coffee inflation persist
Whether share repurchases resume in H2 FY2026 now that China proceeds cut debt to $11.8B and cash is $3,449.8M
Global growth of 7.9% was driven by a 4.2% increase in transactions and a 3.5% increase in average ticket, with U.S. up 7.9%.
Consolidated expanded 60 to 10.5%, helped by sales , lower inflation, and tariff refunds, partially offset by higher restructuring costs and labor investments.
North America grew 7% to $7.4B on an 8.1% increase, and expanded 30 to 13.6%.
International fell 34% to $1.3B due to the China JV conversion, but expanded 550 to 19.1% as the shift to a licensed model improved profitability.
The company used $1.3B of China divestiture proceeds to senior notes, reducing debt and strengthening the balance sheet.
Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in the commodity price risk, foreign currency exchange risk, equity security price risk, or interest rate risk discussed in Item 7A of the 10-K.
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There has been no material change in the commodity price risk, foreign currency exchange risk, equity security price risk, or interest rate risk discussed in Item 7A of the 10-K.
See Note 15, Commitments and Contingencies, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for information regarding certain legal proceedings in which we are involved.
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See Note 15, Commitments and Contingencies, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for information regarding certain legal proceedings in which we are involved.
In addition to the other information set forth in this 10-Q, you should carefully consider the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in our 10-K. There have been no material changes to the risk factors disclosed in our 10-K.
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In addition to the other information set forth in this 10-Q, you should carefully consider the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in our 10-K. There have been no material changes to the risk factors disclosed in our 10-K.