Starbucks Earnings: U.S. Demand Offsets China Weakness

Starbucks reported higher domestic sales than expected for the July-September period, yet the company's total revenue came in below analyst projections. U.S. same-store sales increased by 7.7% during the quarter. The growth was described as broad-based, spanning different age groups, income levels, and times of day. Popular fall beverages and the afternoon matcha trend helped drive customer traffic.

Global same-store sales rose by 7.2%, exceeding the 6% increase that Wall Street analysts polled by FactSet had anticipated. The company stated that matcha has grown into a $1 billion platform, primarily enjoyed in the afternoon, which is contributing to higher store visits. This domestic strength provided a counterbalance to softer performance in international markets.

Net revenue for the quarter dropped by 4% to $9.14 billion. This figure fell short of the $9.2 billion that analysts had forecast. Starbucks attributed the revenue decline to lower contributions from China, where the company finalized a joint venture in the spring. Under this arrangement, Chinese investment firm Boyu Capital operates the stores, while Starbucks retains a 40% interest.

International same-store sales increased by less than 1% during the fourth quarter. The company also noted a 2.8% decline in international store traffic. These figures highlight the varying performance between the domestic and overseas markets as Starbucks continues to adjust its global footprint.

The company has been reducing its U.S. store count to focus on the most profitable locations. In late September, Starbucks announced the immediate closure of 250 North American stores. This move marked the second major round of closures under Chairman and CEO Brian Niccol, who joined the company in 2024. A previous round in September 2025 resulted in the closure of 627 stores across North America and Europe.

For the 2027 fiscal year, Starbucks expects net revenue to fall by 1%, primarily due to its China business. This projection is lower than the 1% revenue increase that Wall Street had forecast. The company also anticipates that North American same-store sales will grow by 4% for the year, a slowdown from the 6.6% growth seen in its 2026 fiscal year. Adjusted for one-time items, including restructuring costs, the company earned 80 cents per share, surpassing the 72 cents analysts had predicted.

Starbucks shares fell by nearly 2% in after-hours trading on Thursday following the announcement of these results.