STARBUCKS CORP (SBUX)

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Interim Report on Form 10-Q includes certain“forward-looking”statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and the potential future results of Starbucks Corporation (together with its subsidiaries) that are based on our current expectations, estimates, forecasts, and projections about, among other things, our business, our results of operations, the industry in which we operate, our economic and market outlook, and the beliefs and assumptions of our management. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believes,” “continues,” “expects,” “anticipates,” “forecasts,” “estimates,” “intends,” “plans,” “seeks,” or words of similar meaning, or future or conditional verbs, such as “will,” “should,” “could,” “would,” “may,” “aims,” “intends,” or “projects,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. Our forward-looking statements, and the risks and uncertainties related thereto, include, but are not limited to, those described under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed 10-K and 10-Q and in other reports we file with the U.S. Securities and Exchange Commission (“SEC”), as well as, among others:

• our ability to preserve, grow, and leverage our brands;

• the impact of our brand marketing, promotional, advertising, and pricing strategies, platforms, reformulations, innovations, or customer experience initiatives or investments;

• the costs and risks associated with, and the successful and timely execution and effects of, our existing and any future business opportunities, expansions, initiatives, strategies, investments, transformation efforts, and plans, including our “Back to Starbucks” strategy and our restructuring plans;

• the costs and risks associated with, and the successful execution and effects of, strategic changes to our ownership and operating structure, including as a result of acquisitions, divestitures, other strategic transactions or entry into joint ventures, including our joint venture with respect to Starbucks retail operations in China;

• our ability to align our investment efforts with our strategic goals;

• evolving consumer preferences, demand, consumption, or spending behavior, reduction in discretionary spending and price increases, and our ability to anticipate or react to these changes;

• the ability of our business partners, suppliers, and third-party providers to fulfill their responsibilities and commitments and our reliance on certain key business partners and suppliers;

• the potential negative effects of food or beverage safety incidents or product recalls, including any perceived association of our products or brands with such incidents;

• our ability to open new stores and efficiently maintain the attractiveness of our existing stores and manage related costs;

• our heavy reliance on the financial performance of our North America operating segment and our dependence on the performance and growth of certain international markets;

• our ability to operate and successfully expand our footprint in international markets, which is influenced by factors distinct from our North America operating segment;

• inherent risks of operating a global business, including changing conditions in our markets; local factors affecting store openings; protectionist trade or foreign investment policies, including trade restrictions, tariffs, quotas, import/export regulations, customs restrictions, sanctions, countersanctions, and retaliatory measures; compliance with local laws and other regulations; and local labor policies and conditions, including labor strikes and work stoppages;

• higher costs, lower quality, or unavailability of coffee, dairy, cocoa, energy, water, raw materials, packaging, or product ingredients and related volatility;

• the ability of our supply chain to meet current or future business needs and our ability to scale and improve our forecasting, planning, production, and logistics management;

• the potential impact on our supply chain and operations of adverse weather conditions, natural disasters, or significant increases in logistics costs;

• a worsening in the terms and conditions upon which we engage with our manufacturers and source suppliers;

• the impact of unfavorable macroeconomic conditions and other factors, including economic slowdowns or recessions, rising real estate costs, supply chain disruptions, climate change and extreme weather events, inflation and interest rate fluctuations, government shutdowns, labor unrest, geopolitical instability, disruptions in credit markets and foreign current exchange rate volatility;

• failure to meet market expectations for our financial performance or any announced guidance and the impact thereof;

• failure to attract or retain key executive or partner talent;

• changes in the availability and cost of labor, including any union organizing efforts and our responses to such efforts;

• the impact of, and our ability to respond to, substantial competition from new entrants, consolidations by competitors, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods); marketing; category expansion; product introductions; or entry or expansion in our geographic markets;

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• evolving corporate governance and public disclosure regulations and expectations, including with respect to sustainability matters;

• the potential impact of activist shareholder actions or tactics;

• failure to comply with applicable laws and complex and changing legal and regulatory requirements, including those governing privacy, data protection, artificial intelligence, and other emerging technologies;

• the impact or likelihood of significant legal disputes and proceedings or government investigations;

• the unauthorized access, use, theft, or destruction of our data, or of our proprietary or confidential information, including as a result of increasingly sophisticated threats enabled or accelerated by artificial intelligence, and the impact thereof;

• potential negative effects of, and our ability to respond to, a material failure, inadequacy, or interruption of our information technology systems or digital platforms, or those of our third-party business partners or service providers, or failure to comply with data protection laws; and

• our ability to adequately protect our intellectual property or adequately ensure that we are not infringing the intellectual property of others.

In addition, many of the foregoing risks and uncertainties are, or could be, exacerbated by any worsening of the global business and economic environment, and new risks periodically emerge. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. We are under no obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise.

This information should be read in conjunction with the unaudited consolidated financial statements and the notes included in Item 1 of Part I of this 10-Q, as well as the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in the 10-K.

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Introduction and Overview

Starbucks is the premier roaster, marketer, and retailer of specialty coffee globally, with a presence in 90 markets worldwide. As of June 28, 2026, Starbucks had more than 41,000 company-operated and licensed stores, an increase of 1% from the prior year. Additionally, we sell a variety of consumer-packaged goods, primarily through the Global Coffee Alliance established with Nestlé and other partnerships and joint ventures.

We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America, and the Caribbean; and 3) Channel Development. Unallocated corporate expenses are reported within Corporate and Other.

We believe our financial results and long-term growth model will continue to be driven by new store openings, comparable store sales, and operating margin management, underpinned by disciplined capital allocation. The comparable store sales metric includes company-operated stores open 13 months or longer, and excludes the effects of foreign currency exchange rates. Stores that are temporarily closed for fewer than three weeks or operating at reduced hours remain in comparable store sales while permanent store closures are removed in the month following closure. We analyze comparable store sales on a constant currency basis as this helps identify underlying business trends without distortion from the effects of currency movements. Throughout this MD&A, we commonly discuss the following key operating metrics, which we believe are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies:

•New store openings and store count

•Comparable store sales

•Operating margin

Our fiscal year ends on the Sunday closest to September 30. Fiscal 2026 and 2025 include 52 weeks. All references to store counts, including data for new store openings, are reported net of store closures, unless otherwise noted.

Starbucks results for the third quarter of fiscal 2026 showed continued progress and momentum on key “Back to Starbucks” initiatives, as demonstrated through continued global comparable store sales growth, consolidated operating margin expansion, and improved customer engagement. These initiatives included the Green Apron Service standard to improve operational consistency and the coffeehouse experience, engaging consumer marketing, disciplined menu innovation, a redesigned Starbucks Rewards program, and coffeehouse uplifts, all of which are intended to deliver greater connection, consistency, and value for customers. During the third quarter of fiscal 2026, consolidated net revenues decreased 1% to $9.3 billion compared to $9.5 billion in the third quarter of fiscal 2025, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026. The decline in consolidated revenues was offset by a 7.9% increase in global comparable store sales, driven by a 7.9% increase in the U.S. market. Also contributing to the offset was higher revenues from our international licensed store business. Specific to the U.S. market, the increase in comparable store sales was driven by a 4.2% increase in comparable transactions and a 3.6% increase in average ticket, primarily driven by higher delivery sales and strength in customer food attach and beverage modifications. Consolidated operating margin expanded 60 basis points from the prior year to 10.5%, primarily driven by sales lever

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Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Readers are cautioned that these forward-looking statements are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified above, under Risk Factors in Part I, Item 1A of this 10-K, and elsewhere herein. Therefore, our actual results could differ materially from those discussed in the forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason. Please also see the cautionary language at the beginning of Part I of this 10-K regarding forward-looking statements.

General

Our fiscal year ends on the Sunday closest to September 30. All references to store counts, including data for new store openings, are reported net of related store closures, unless otherwise noted. Fiscal years 2025, 2024, and 2023 included 52 weeks.

The discussion of our financial condition and results of operations for the fiscal year ended October 1, 2023, included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) can be found in the Annual Report on Form 10-K for the fiscal year ended September 29, 2024.

Overview

We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America, and the Caribbean; and 3) Channel Development. Unallocated corporate expenses are reported within Corporate and Other.

We believe our financial results and long-term growth model will continue to be driven by new store openings, comparable store sales, and operating margin management, underpinned by disciplined capital allocation. Comparable store sales includes company-operated stores open 13 months or longer, and exclude the effects of foreign currency exchange rates. Stores that are temporarily closed remain in comparable store sales while permanent store closures are removed in the month following closure. We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies. Throughout this MD&A, we commonly discuss the following key operating metrics:

•New store openings and store count

•Comparable store sales

•Operating margin

Starbucks results for fiscal 2025 showed continued progress on key “Back to Starbucks” initiatives, specifically investments in coffeehouse partners, as we work to rebuild a stronger Starbucks. These investments include the Green Apron Service model, additional investments in staffing and hours at the right times to deliver enhanced customer service, and the Leadership Experience 2025, a conference designed to empower and motivate our retail leaders to accelerate our “Back to Starbucks” strategy. Consolidated net revenues increased 3% to $37.2 billion in fiscal 2025 compared to $36.2 billion in fiscal 2024, primarily driven by incremental revenues from net new company-operated stores over the past 12 months, an increase in revenue in the Global Coffee Alliance, and incremental revenue from the acquisition of 23.5 Degrees Topco Limited, a U.K. licensed business partner, partially offset by a decrease in comparable store sales and a decline in our licensed store business.

For both the North America segment and U.S. market, revenue increased 1% in fiscal 2025 compared to fiscal 2024, primarily driven by net new company-operated store growth of 4%, or 441 stores, over the past 12 months, prior to the 584 North America restructuring closures late in the fourth quarter of fiscal 2025. This growth was partially offset by a 2% decline in comparable store sales. Comparable transactions declined 4%, partially offset by average ticket growth of 2%, primarily driven by annualization of pricing in the current year. Also contributing were lower product and equipment sales to, and royalty revenues from, our licensees.

For the International segment, revenue increased 7% in fiscal 2025 compared to fiscal 2024, primarily driven by net new company-operated and licensed store openings over the past 12 months, incremental net revenue from the conversion of 113 licensed stores to company-operated stores following the acquisition of 23.5 Degrees Topco Limited during the first quarter of fiscal 2025, and higher product and equipment sales to, and royalty revenues from, our licensees.

Revenue for our Channel Development segment increased 6% in fiscal 2025 compared with fiscal 2024, primarily driven by an increase in revenue in the Global Coffee Alliance.

In support of our “Back to Starbucks” strategy, we completed our assessment of our coffeehouse portfolio late in the fourth quarter and made decisions to close stores that did not demonstrate a viable path to profitability, or meet our standards of delivering a warm, welcoming space for our customers and partners. Our store closures in North America were substantially

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completed in fiscal 2025 and the International store closures are expected to be completed in the first half of fiscal 2026. As a result of these closures, we expect a fiscal 2026 reduction in our baseline North America company-operated revenues, partially offset by sales transfer to nearby coffeehouses that remain open. We also expect the future impact to operating margins to be slightly accretive. With a healthier base of coffeehouses, we see meaningful opportunity for disciplined growth. We anticipate that these actions, along with simplifying our broader support organization, will allow us to restructure, redeploy, and refocus our resources on priorities that we believe will deliver long-term sustainable business growth.

We expect that the macroeconomic challenges we have been experiencing, including impacts from new tariffs and dynamic coffee prices, will continue; however, we are encouraged by the results we have seen from our “Back to Starbucks” initiatives. Following our Green Apron Service model going live across our full U.S company-operated store portfolio in the fourth quarter of fiscal 2025, we are focused on empowering coffeehouse leaders to take ownership of sustaining the model as our permanent way of working, which we expect to enhance the customer experience and drive future transaction growth. Further, as announced in early November 2025, we look forward to working with our new strategic joint venture partner, Boyu Capital, to accelerate long-term growth in China. We believe, through strategic prioritization, that we are taking the right actions now and in the future, specifically through our investments in store partners, uplifting the coffeehouse experience through disciplined capital deployment, introducing new food and beverage platforms, reimagining the Starbucks rewards program, and enhancing support for our licensee partners. These actions, while driving more efficiency, accountability, and agility as a company, will lay the foundation for the future of Starbucks.

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Financial Highlights

•Total net revenues increased 3% to $37.2 billion in fiscal 2025 compared to $36.2 billion in fiscal 2024.

•Consolidated operating income decreased to $2.9 billion in fiscal 2025 compared to $5.4 billion in fiscal 2024. Fiscal 2025 operating margin was 7.9% compared to 15.0% in fiscal 2024. Operating margin contraction of 710 basis points was primarily due to restructuring costs associated with the closure of coffeehouses and simplification of our support organization (approximately 240 basis points), deleverage (approximately 210 basis points), investments in support of “Back to Starbucks,” which were largely in labor hours (approximately 130 basis points), and inflation (approximately 80 basis points).

•Diluted earnings per share (“EPS”) for fiscal 2025 declined to $1.63, compared to EPS of $3.31 in fiscal 2024. The decrease was primarily driven by contraction in operating margin, including restructuring and impairment costs in support of our “Back to Starbucks” strategy, as compared to the prior year.

•Capital expenditures were $2.3 billion in fiscal 2025 and $2.8 billion in fiscal 2024.

•We returned $2.8 billion and $3.8 billion to our shareholders in fiscal 2025 and fiscal 2024, respectively, through dividends and share repurchases.

Acquisitions and Divestitures

See Note 2, Acquisitions and Divestitures, to the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding acquisitions and divestitures.

RESULTS OF OPERATIONS — FISCAL 2025 COMPARED TO FISCAL 2024

Consolidated results of operations (in millions):

Revenues

Total net revenues increased $1 billion, or 3%, over fiscal 2024, primarily due to higher revenues from company-operated stores ($979 million) and other revenues ($184 million), partially offset by a decline in revenues from licensed stores ($155 million).

Company-operated store revenue increased $979 million, primarily driven by net new company-operated store growth of 5%, or 1,010 stores, over the past 12 months ($1.2 billion), prior to the 627 restructuring closures late in the fourth quarter of fiscal 2025, and incremental revenue from the conversion of 113 licensed stores to company-operated stores ($131 million) following the acquisition of 23.5 Degrees Topco Limited. Partially offsetting this increase was a 1% decline in comparable store sales ($408 million), attributable to a 2% decline in comparable transactions, partially offset by a 1% increase in average ticket, primarily due to annualization of prior year pricing.

Licensed stores revenue decreased $155 million, primarily driven by lower product and equipment sales to, and royalty revenues from, our licensees in our North America segment ($143 million), the impact of the acquisition of 23.5 Degrees Topco Limited ($36 million), and by unfavorable foreign currency translation impacts ($22 million). These decreases were partially offset by higher product sales to, and royalty revenues from, our licensees in our International segment ($79 million).

Other revenues increased $184 million, primarily due to an increase in revenue in the Global Coffee Alliance ($99 million) and increased sales of cocoa butter to third parties ($66 million).

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Operating Expenses

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