Key Points:
- Starbucks beats revenue expectations, posting $9.46 billion in Q3 2025, surpassing Wall Street’s forecast.
- Earnings and profitability decline, with adjusted EPS dropping to $0.50 and net income falling 47% year-over-year.
- Turnaround strategy shows early momentum, including store redesigns, service improvements, and new product innovations.
Starbucks beats revenue expectations in fiscal Q3 2025, but profits fall short of forecasts. For the 13-week quarter ending June 29, the coffee giant posted $9.46 billion in revenue, up 4% from the same period last year, and ahead of Wall Street’s projected $9.31 billion.
However, adjusted earnings per share (EPS) came in at $0.50, missing the $0.65 analysts had anticipated. That marks a significant decline from the prior year, when Starbucks posted EPS of $1.00. Net income also dropped sharply to $558 million, nearly 47% lower than the same quarter in 2024.
Global same-store sales fell 2%, continuing a downward trend for the sixth straight quarter. North America mirrored that drop, while China—the company’s second-largest market—grew modestly by 2%, buoyed by recent pricing changes that helped offset competitive pressure.
“Back to Starbucks” Turnaround Strategy Gains Momentum
CEO Laxman Narasimhan, who took over in September 2024, credited early signs of improvement to Starbucks’ strategic reset dubbed “Back to Starbucks.” The initiative focuses on refining the customer experience through menu simplification, service enhancements, and store redesigns.
A key piece of this effort is the nationwide rollout of the Green Apron Service model, which emphasizes speed, hospitality, and personalized service. Stores piloting the program have already shown improved throughput and higher customer satisfaction.
Starbucks Beats also plans to modernize over 1,000 stores by the end of 2026. This includes new smaller-footprint “coffee houses of the future” with drive-thrus and simplified workflows to optimize service. The company is also investing $500 million in added labor hours to address staffing shortfalls and improve service quality across U.S. locations.
In-store changes aim to reconnect with Starbucks’ original “third place” ethos—bringing back ceramic cups, condiment bars, handwritten cup messages, and more comfortable seating. Menu updates include removing dairy surcharges and simplifying pricing, with Narasimhan stating that any future price hikes would be a “last resort.”
Investors Optimistic Despite Margin Pressures
Despite falling earnings, Starbucks stock rose between 3.8% and 4.6% in after-hours trading on investor optimism surrounding the turnaround strategy. The company’s operating margin dropped to 10.1%, down 650 basis points year-over-year, largely due to one-time investments such as its leadership event in Las Vegas, which alone cost about 11 cents per share.
Looking forward, Starbucks is exploring strategic partnerships or joint ventures in China, a market where it hopes to maintain a controlling stake. Meanwhile, product innovation continues with protein cold foam drinks, gluten-free pastries, and coconut water–based beverages set to launch in the U.S. by year-end.
While Starbucks Beats still faces headwinds—particularly in profitability and store traffic—the brand’s ambitious reset plan appears to be gaining traction. Analysts and investors alike are watching closely as the company bets big on reinventing the Starbucks experienc
