SBUX: FY25 Deep Dive
FY25 (year ended Sept 28, 2025) revenue $37.18B (+2.8%) — operating income $3.58B (-34%) on Back to Starbucks restructuring + investment. Q4 FY25 first positive comp in 7 quarters (+1% global). Q1 FY26 (calendar Q4 2025) comps accelerated to +4% globally with China +7% — turnaround inflecting. Buybacks $0 FY25 (vs $1.27B FY24); dividend $2.77B held.
Key Takeaways
Starbucks closed fiscal 2025 (year ended September 28, 2025) at $37.18 billion of revenue, up 2.8% YoY — a soft headline that masks the much larger structural story: this was the first year of CEO Brian Niccol's "Back to Starbucks" turnaround program, with FY25 absorbing $892 million of restructuring and impairments charges plus heavy operational investment. Operating income compressed -34% to $3.58 billion (operating margin 9.6% vs 14.9% FY24); net income fell -51% to $1.86 billion ($1.63 diluted EPS vs $3.31 FY24). The earnings compression was the cost of the turnaround. The structural read in Q4 FY25 — and even more so the recently-reported Q1 FY26 (calendar Q4 2025) — is that the program is working: Q4 FY25 was the first positive comparable store sales quarter in seven quarters (+1% global comps); Q1 FY26 accelerated to +4% global comps with North America +4% (3 percentage points of transaction growth) and China +7% (return to growth from a multi-quarter trough). Free cash flow was $2.44 billion (vs $3.32B FY24), capex $2.31 billion, dividends $2.77 billion. The most striking capital allocation signal: $0 in buybacks for FY25 (vs $1.27B FY24, $984M FY23) — management explicitly redirected cash flow to dividend continuity + Back to Starbucks investment + balance sheet preservation. Total debt $26.6 billion. Sell-side coverage is 13 analysts: 7 Buy / 6 Hold / 0 Sell, consensus PT $103.69, range $89-$122. Recent activity reflects the inflecting turnaround: Jefferies upgraded Underperform → Hold (April 13); RBC downgraded Outperform → Sector Perform (March 18); 6 of 10 covered actions in window were PT raises.
Main business structure
Starbucks reports three operating segments:
| Segment | FY25 Revenue ($B) | YoY |
|---|---|---|
| North America (company-operated) | ~30.7 | +3% |
| International | ~8.0 | +5% |
| Channel Development | ~2.1 | +10-15% |
| Eliminations | (3.6) | — |
| Total | 37.18 | +2.8% |
(Approximate segment splits per management commentary; exact 10-K segment breakdown follows the company-operated / licensed / other revenue framework: company-operated $30.74B, licensed $4.35B, other $2.09B.)
North America (~75% of company-operated revenue): ~12,000+ company-operated US stores + Canadian operations + ~6,000 US licensed stores (in Target, hospitals, airports, etc.). The largest concentration of "Back to Starbucks" operational investment — Green Apron Service (operational standards), SmartQ algorithm (throughput), uplifted store renovations, menu rationalization. US company-operated comps: Q1 FY25 -4%, Q2 -1%, Q3 -2%, Q4 flat, Q1 FY26 +4% — a clean stepwise recovery curve.
International (~21%): ~30,000+ stores across China (~8,500), Japan, UK, Latin America, MENA. China is the largest international market and was the structural concern through FY25 — local competitive intensity (Luckin Coffee + Cotti at low price points) compressed China comps. Q1 FY26 inflection: China +7% same-store sales is the cleanest data point showing the turnaround is working internationally too. Boyu Capital partnership in China (announced) provides growth capital + local market expertise.
Channel Development (~6%): at-home / ready-to-drink / Global Coffee Alliance (Nestlé partnership for K-Cup pods + RTD) + foodservice. Higher-margin, capital-light segment. +10-19% revenue growth quarter-to-quarter on continuing distribution expansion.
Store count actions. Net store count declined ~1% in FY25 — the first-ever store count decline. Reflects the strategic decision to close underperforming locations (mobile-order-only / "to-go" formats not aligned with the third-place strategy). Remodels / "uplift" renovations targeting 1,000+ stores by end of FY26.
Customer concentration. Highly fragmented retail customer base; no single 10%+ disclosure.
Scale anchors. ~38,000 stores globally. ~75-80M Starbucks Rewards members. 76 countries.
Key core metrics (3-year trend)
1. Revenue and the cycle bottom
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Revenue ($B) | 35.98 | 36.18 | 37.18 |
| YoY | — | +0.6% | +2.8% |
| Net income ($B) | 4.12 | 3.76 | 1.86 |
| Diluted EPS | $3.58 | $3.31 | $1.63 |
The two-year earnings compression reflects (a) the 7-quarter run of negative comps culminating in Q3 FY25 (-2% US), and (b) FY25's $892M restructuring charges in the Back to Starbucks initiative.
2. Comparable store sales — the inflection sequence
| Quarter | Global comp | US co-op | China |
|---|---|---|---|
| Q1 FY25 | -4% | -4% | -6% |
| Q2 FY25 | -1% | — | flat |
| Q3 FY25 | -1% | -2% | +2% |
| Q4 FY25 | +1% | flat | +3% |
| Q1 FY26 | +4% | +4% | +7% |
The stepwise recovery is the cleanest turnaround sequence in big consumer this year. Q1 FY26's +7% China comp + 3pp of transaction growth in US is the structural confirmation.
3. Free cash flow
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| OCF ($B) | 6.0 | 6.1 | 4.7 |
| Capex ($B) | 2.33 | 2.78 | 2.31 |
| FCF ($B) | 3.68 | 3.32 | 2.44 |
FCF compression reflects net income fall + working capital + restructuring cash outflows.
4. Capital return — the deliberate buyback pause
| FY23 | FY24 | FY25 | |
|---|---|---|---|
| Dividends ($B) | 2.43 | 2.59 | 2.77 |
| Buybacks ($B) | 0.98 | 1.27 | 0 |
| Total return ($B) | 3.41 | 3.85 | 2.77 |
| Total debt ($B) | 24.6 | 25.8 | 26.6 |
Zero buybacks in FY25 — the deliberate decision to preserve capital for the Back to Starbucks investment + dividend continuity + balance sheet preservation. Dividend grew 7% YoY to $2.77B. The buyback pause should reverse in FY26-FY27 as comps recover and FCF rebuilds.
Market evaluation
Sell-side coverage (as of April 27, 2026). 13 analysts cover the stock.
| Rating | Count |
|---|---|
| Buy / Outperform / Overweight | 7 |
| Hold / Neutral / Sector Perform | 6 |
| Sell | 0 |
Price targets. Consensus $103.69, range $89 (low) to $122 (high: Tigress Financial, Buy maintained).
Recent analyst activity (February through April 2026). 10 covered actions in the window:
Most striking moves:
- Jefferies (April 13): upgraded Underperform → Hold, $86 → $92 — the structural confirmation that the turnaround is reaching even the most skeptical analysts
- RBC Capital (March 18): downgraded Outperform → Sector Perform, $105 PT held — the lone downgrade, taking a cautious cycle view
- Stifel (April 21): $105 → $115, Buy maintained
- Tigress Financial (April 15): $136 → $122, Buy reinstated — modest -$14 trim
- JPMorgan (April 24): $95 → $100, Overweight maintained
- Citigroup (April 14): $92 → $99, Neutral maintained
- DA Davidson initiated Neutral at $97 on March 6
- Guggenheim (March 5): $90 → $95, Neutral maintained
The pattern: 6 of 10 actions PT raises, 1 upgrade, 1 downgrade. The Jefferies upgrade-from-Underperform is the most-watched signal — bears capitulating on the turnaround's traction.
Buy-side positioning. SBUX is a core consumer discretionary holding with turnaround optionality. Trades at premium-to-restaurant-peers multiple on brand strength + China optionality. Short interest moderate (~2-3% of float).
FY25 corporate structure: turnaround printed by Q1 FY26
FY25 was the cost-of-turnaround year — operating margin compression from 14.9% to 9.6%, EPS halved, $892M restructuring charges absorbed, $0 buybacks. But Q4 FY25 (+1% comp, first positive in 7 quarters) and especially the recently-reported Q1 FY26 (+4% global comp, +4% US, +7% China, +5% International) confirms the inflection. The structural read is that the Back to Starbucks operational program — Green Apron Service standards, SmartQ throughput algorithm, uplift store renovations, menu rationalization, condiment bars restored, brand marketing reinvented — is producing the comp-recovery sequence management committed to. The two FY26 watch items: (1) does the +4% US comp / +7% China comp pace sustain through CY26 or face tougher comparisons, and (2) when does management resume buybacks (FY26 H2 likely if comps hold). The remaining Q2-Q4 FY26 prints will determine whether the operating margin recovers toward 13-15% historical levels (bull thesis) or stays in the 10-12% range (bear thesis on structural cost base).