Starbucks sells coffee, other drinks and food through its cafés, and earns product sales and fees from business partners. In fiscal 2026, more transactions at established North American cafés helped rebuild profit, while the China partnership released cash for debt repayment. Yet operating cash grew only 5.1%; a sharp reduction in capital spending supplied most of the improvement in cash left after investment. Planned spending increases and renewed buybacks will require stronger cash generation, use of existing cash or additional borrowing.
Analysis period: fiscal year ended September 27, 2026. Research cutoff: November 13, 2026, New York date; the latest company disclosures reviewed are dated November 12.
Source: Starbucks FY2026 Form 10-K, Management’s Discussion and Analysis, pp. 28–39, and cash-flow statement, p. 48; October 29, 2026 earnings call, p. 10, capital-allocation plans.
1. More orders helped North America, but better service still carries a cost
Starbucks is recovering sales at its established cafés, while still paying to improve the experience. North American comparable sales rose 6.6% in fiscal 2026: transactions increased 3.6% and average spending per transaction rose 3.0%. These figures measure company-operated cafés open at least 13 months, rather than sales from every location.
The transaction increase matters because fiscal 2025 had brought a 4% decline in North American comparable transactions and a 2% decline in comparable sales. Customers were placing more orders again in fiscal 2026. Higher average spending also helped. Starbucks attributes that increase to delivery, pricing, the products customers chose and more customers adding food to their orders.
The recovery reached profit, but it has not restored the earnings level achieved two years earlier.
| Consolidated reported results; USD millions except margins and EPS | FY2024 | FY2025 | FY2026 |
|---|---|---|---|
| Revenue | 36,176.2 | 37,184.4 | 37,910.6 |
| Operating profit | 5,408.8 | 2,936.6 | 3,691.1 |
| Operating margin | 15.0% | 7.9% | 9.7% |
| Net profit attributable to Starbucks | 3,760.9 | 1,856.4 | 2,526.7 |
| Net margin attributable to Starbucks | 10.4% | 5.0% | 6.7% |
| Diluted earnings per share, USD | 3.31 | 1.63 | 2.21 |
Reporting basis: All three fiscal years contain 52 weeks. FY2026 includes China retail operations only until their March 30 divestiture; the earlier years include those operations throughout. Margins are calculated from the reported amounts and rounded to one decimal place.
Sources: FY2026 10-K, pp. 28, 30, 33 and 45; FY2025 results, October 29, 2025, full-year comparable-sales highlights.
Management’s “Back to Starbucks” plan uses more suitable staffing, better service routines and refreshed cafés to bring customers back. Higher sales help spread the cost of running each café across more orders. Starbucks estimates that this benefit added about 2.9 percentage points to North America’s operating margin, while labor investment absorbed about 1.8 points. The segment’s reported margin ultimately rose only half a percentage point, to 12.0%.
A useful check is café operating expense relative to company-operated café sales. In North America, that measure remained 56.4% in both years. Thus, stronger sales largely paid for the extra cost of operating the cafés rather than sharply reducing that cost per dollar of sales. Savings elsewhere and lower restructuring charges also contributed to the profit improvement.
Source: FY2026 10-K, pp. 28–29 and 33, North America results and management’s margin explanation.
The smaller café network also affects the interpretation. North American company-operated locations fell from 11,018 to 10,902. When a café closes, some customers move to another Starbucks, helping that remaining location’s comparable sales. On the earnings call, management estimated that closures and transferred sales helped fourth-quarter U.S. comparable sales by about two percentage points. That estimate applies to the quarter, not the full year.
Sources: FY2026 10-K, p. 7, café roll-forward; October 29 earnings call, pp. 13–14, transferred sales.
Competition remains active even as Starbucks improves. Dutch Bros reported a 5.4% increase in comparable sales at its company-operated shops in the three months ended September 30, including 1.0% more customer visits. Its total network reached 1,273 shops from 1,081 a year earlier. Those figures demonstrate another expanding source of competition for beverage occasions; different café formats and comparable-store definitions prevent a precise market-share conclusion. Starbucks’ practical advantage must come from making its much larger network consistently convenient and worth revisiting.
Source: Dutch Bros third-quarter 2026 results, November 4, 2026, “Select Financial Metrics”; its comparable base uses shops open at least 15 complete months.
2. The China partnership raised cash and changed how growth appears
China’s lower reported revenue largely reflects a change in ownership and accounting. On March 30, Starbucks completed the sale of a 60% stake in its China retail business to Boyu Capital. Starbucks retained 40%, along with ownership of the brand and intellectual property. Its stated purpose was to combine the brand with Boyu’s local expertise, support expansion and improve financial flexibility.
Before the sale, Starbucks recorded the cafés’ customer sales and operating costs in full. Afterward, it recorded product sales and fees under the licensing arrangements, plus its share of the joint venture’s earnings. Nearly 8,000 cafés changed classification from company-operated to licensed at closing. Those transfers were not new café openings.
This change removes a large amount of revenue and expense from Starbucks’ accounts. International revenue fell 13.8%, yet operating profit rose 25.4%. Management attributes about 3.3 percentage points of the segment’s 5.6-point margin improvement to the new ownership model. Another approximately two points came from lower depreciation and café costs after the China assets were classified as held for sale before closing. Those accounting changes explain most of the margin expansion.
| Reported segment results; USD millions | FY2025 revenue | FY2026 revenue | FY2025 operating profit/(loss) | FY2026 operating profit/(loss) |
|---|---|---|---|---|
| North America | 27,373.1 | 28,897.8 | 3,156.7 | 3,454.2 |
| International | 7,819.9 | 6,744.4 | 950.0 | 1,191.1 |
| Channel Development | 1,871.7 | 2,172.7 | 885.1 | 1,016.2 |
| Corporate and Other | 119.7 | 95.7 | (2,055.2) | (1,970.4) |
| Consolidated total | 37,184.4 | 37,910.6 | 2,936.6 | 3,691.1 |
Reporting basis: These are Starbucks’ reported segments, including its recognized share of joint-venture income and all corporate costs. They do not add the joint ventures’ full profits to Starbucks’ results. The China disposal gain is below operating profit and is excluded from this table.
Source: FY2026 10-K, pp. 28–29 and 33–36; Notes 1, 2, 6 and 17.
The transaction also changed the assets supporting future earnings. Starbucks received approximately $3.1 billion of consideration, including its share of borrowing proceeds raised by the joint venture. The cash-flow statement reports $2,544.2 million of net divestiture proceeds; that is the amount used in this report’s cash analysis. Starbucks retained an investment of approximately $1.2 billion instead of continuing to consolidate the China cafés’ individual assets and liabilities.
The joint venture therefore reduces Starbucks’ direct responsibility for operating and building those cafés, while leaving it exposed through its investment, licensing income and brand. Borrowing at the joint venture helped finance the transaction, so future growth also depends on that business managing its own debt and cash needs.
Source: FY2026 10-K, Note 2, p. 62; Note 6, p. 70; cash-flow statement, p. 48.
China still requires a strong local operating response. Luckin Coffee’s November 3 release reported 2,599 net openings during the September quarter, including 2,543 in China and Hong Kong. Yet comparable sales at its self-operated shops fell 11.1%, against growth of 14.3% in the year-earlier quarter. Luckin attributed the difficult comparison mainly to heavy food-delivery subsidies in the earlier period. Fast expansion and uneven sales at existing shops can coexist. Boyu’s ability to choose locations, retain customers and control costs matters more to Starbucks than the partnership’s long-term aspiration for as many as 20,000 China locations alone.
Sources: Luckin Coffee third-quarter 2026 results, November 3, 2026, quarterly operating highlights; FY2026 10-K, p. 29, China partnership objectives. Luckin’s figures describe its own business and are not a comparison of Starbucks China’s profit margins.
Channel Development, which includes packaged coffee and ready-to-drink partnerships, provided another source of profit. Its revenue rose 16.1%, largely because elevated coffee prices increased revenue through the Nestlé alliance. Operating profit rose 14.8%, while the margin slipped from 47.3% to 46.8%. Higher coffee prices therefore helped the reported sales total without producing a matching percentage increase in profit. This business broadens Starbucks’ reach, but the sales increase does not establish an equivalent increase in the quantity of coffee customers bought.
Source: FY2026 10-K, pp. 30 and 35; Note 6, North American Coffee Partnership.
3. Cost savings helped, but restructuring is still consuming resources
The earnings improvement survives management’s adjustments, although the recovery remains incomplete. Reported operating profit increased 25.7% from fiscal 2025, but remained 31.8% below fiscal 2024. General and administrative expense fell $244.3 million. Starbucks identified $292 million of restructuring savings and operating efficiencies, alongside benefits from removing China costs and the absence of the prior year’s Leadership Experience event. Higher performance compensation and China transaction costs absorbed part of those savings.
The restructuring program is intended to leave Starbucks with cafés that meet its service and financial standards and a simpler support organization. Fiscal 2026 included 266 closures under the prior year’s program and 250 under the new program. Charges also covered changes to offices, non-retail facilities and Reserve and Roastery operations. These actions may reduce future costs, but asset write-downs acknowledge that some earlier spending will not earn back its recorded value.
Source: FY2026 10-K, p. 31 and Note 18, pp. 86–88.
Management removes the following items to present its adjusted operating profit. The calculation confirms improvement even after allowing for the unusually large charges in both years.
| Operating-profit reconciliation; USD millions, before income tax | FY2025 | FY2026 |
|---|---|---|
| Reported operating profit | 2,936.6 | 3,691.1 |
| Add restructuring and impairment charges | 892.0 | 688.6 |
| Add China transaction and transition costs | 8.2 | 79.3 |
| Add support-organization transformation costs | 0.0 | 53.7 |
| Remove litigation-settlement benefit | (145.2) | 0.0 |
| Management’s adjusted operating profit | 3,691.6 | 4,512.7 |
| Management’s adjusted operating margin | 9.9% | 11.9% |
Reporting basis: This is an operating-profit, pre-tax reconciliation, not adjusted net income. It removes the listed expenses and the prior-year benefit. It retains ordinary employee stock compensation and China’s changed accounting scope. Adjusted operating profit increased 22.2%.
Source: Starbucks FY2026 results, October 29, 2026, annual GAAP-to-non-GAAP reconciliation and footnotes 2–5.
These exclusions do not make all remaining profit recurring, or all excluded costs finished. Starbucks expects approximately $144 million of further restructuring charges in fiscal 2027 and completion of the existing programs during that year’s first half. At September 27, it still carried $336.2 million of restructuring liabilities. Fiscal 2026 cash payments against the programs totaled $369.2 million. Closing a café can stop its sales immediately while lease and employee-related payments continue.
Source: FY2026 10-K, Note 18, p. 88. Expected FY2027 charges comprise approximately $74 million of lease-related charges and $70 million of asset disposal and impairment charges; these are accounting expenses, not a forecast of cash payments.
Net profit also needs a separate explanation. The China disposal produced a $536.3 million pre-tax gain and $199.5 million of specifically associated income-tax expense. Their calculated after-tax difference is $336.8 million, before the separately reported transaction costs. Starbucks also recorded approximately $273 million of tax expense after changing its plans for keeping foreign earnings invested overseas. That separate tax charge must not be overlooked when assessing the transaction’s effect on annual earnings.
The overall effective tax rate rose from 25.9% to 34.2%. Thus, removing the disposal gain alone would not provide a balanced measure of ongoing earnings: it would leave related transaction effects and unusual tax charges on the other side of the comparison. The clearer business conclusion comes from the improvement in operating profit, tempered by continuing restructuring costs and the accounting benefits in China.
Source: FY2026 10-K, p. 32; Note 2, p. 62; Note 14, pp. 79–82. The approximately $273 million figure follows the consolidated tax discussion on p. 32; the tax rate is calculated on earnings including noncontrolling interests.
4. Lower investment supplied most of the extra cash available
Starbucks covered its capital spending and cash dividends in fiscal 2026, mainly because capital spending fell. Operating cash rose $240.9 million, while cash spent on property and equipment fell $1,041.9 million. That spending decline supplied 81.2% of the improvement in free cash flow, defined here as operating cash less cash additions to property, plant and equipment.
| Cash generation and allocation; USD millions | FY2025 | FY2026 |
|---|---|---|
| Cash from operating activities | 4,747.5 | 4,988.4 |
| Capital spending, shown as a positive use of cash | 2,305.5 | 1,263.6 |
| Free cash flow, calculated | 2,442.0 | 3,724.8 |
| Cash dividends paid | 2,771.4 | 2,824.7 |
| Cash remaining after capital spending and dividends | (329.4) | 900.1 |
Reporting basis: The remainder excludes divestiture proceeds, other investing activity, debt payments and employee-equity cash flows. Starbucks made no open-market share repurchases in either year. The capital-spending measure does not include operating-lease commitments.
Source: FY2026 10-K, cash-flow statement, p. 48; Note 12, p. 77.
The reduction in investment occurred alongside China’s removal from the consolidated business and a smaller company-operated network. Starbucks still spent on its cafés and operating infrastructure. The disclosures do not divide the total into maintenance and growth spending, so the lower total cannot by itself establish either underinvestment or greater investment efficiency.
Nor did the 36.1% increase in net profit produce a similar increase in operating cash. The sale gain increased profit but was removed from operating cash; the sale proceeds appear under investing activities. Some joint-venture earnings also remained inside those businesses: Starbucks recorded $297.7 million of equity-method earnings in the cash reconciliation but received $187.9 million of distributions. Profit earned through a partner becomes available to Starbucks in cash only when paid out or otherwise collected.
Source: FY2026 10-K, pp. 29, 38 and 48; Notes 2 and 6. The equity-method amounts in the cash reconciliation include both core and non-core investments.
Payment timing provided significant support. Taxes payable contributed $427.3 million to operating cash, compared with $103.8 million a year earlier. Starbucks had recorded taxes that had not yet required the same amount of cash payment. Cash taxes paid were $684.0 million, far below the $1,315.0 million tax expense, although deferred taxes and other accounting differences also separate those two measures. The unpaid amounts are a future cash consideration, not another source of profit.
Buying and holding inventory used $176.4 million of cash, less than the $408.4 million used in fiscal 2025. Amounts owed to suppliers added $224.1 million to operating cash. These movements helped cash generation, but they also mean the year’s cash total reflects the timing of purchases and payments as well as café earnings.
Source: FY2026 10-K, cash-flow statement, p. 48; Note 14, pp. 80–81. The operating-cash reconciliation in the calculation notes keeps noncash taxes separate from changes in taxes payable.
The China transaction made debt reduction much easier. Net investing activity supplied $1,112.6 million after including the sale proceeds and capital spending. Financing activity used $5,644.7 million, principally for $2,815.9 million of debt repayments and dividends. Starbucks issued no new long-term debt. Cash ended the year at $3,679.9 million, up $460.1 million. The balance sheet became more flexible, but part of that improvement came from selling control of an existing business rather than from cash earned repeatedly by the remaining operations.
Source: FY2026 10-K, p. 48; Note 9, debt tender offers.
5. Debt fell, while leases and other obligations still matter
Lower debt and unused credit provide room for the next phase, but they do not remove the need to generate cash. The amount of financing debt recorded on the balance sheet fell by $2,797.9 million. Starbucks repaid $1.5 billion of maturing notes and bought back $1,315.9 million of debt principal, using part of the China transaction proceeds for the latter action.
| Consolidated financial position; USD millions | September 28, 2025 | September 27, 2026 |
|---|---|---|
| Cash and cash equivalents | 3,219.8 | 3,679.9 |
| Financing debt, carrying amount | 16,074.8 | 13,276.9 |
| Operating-lease liabilities | 10,536.7 | 9,136.7 |
| Total assets | 32,019.7 | 28,389.9 |
| Total liabilities | 40,108.9 | 36,051.7 |
| Total equity/(deficit), including noncontrolling interests | (8,089.2) | (7,661.8) |
Source: FY2026 10-K, balance sheet, p. 47; Notes 9 and 10. Debt carrying amounts differ from principal because of issuance costs, discounts and hedge-accounting adjustments.
The reduction in assets is largely a change in what Starbucks owns and consolidates. Goodwill—amounts paid in past acquisitions above the separately identified net assets—fell by $2,119.7 million. The China divestiture removed $2,146.3 million of goodwill, partly offset by other changes. This was principally disposal accounting; Starbucks reported no significant goodwill impairment.
Property and equipment fell to $6,944.1 million from $8,493.5 million. Assets representing the right to occupy leased premises fell to $7,858.9 million from $9,315.7 million. China’s removal reduced the assets Starbucks reports. Annual charges for using assets, café closures and write-downs also affect these balances.
Ownership stakes in other businesses moved in the opposite direction. These equity investments rose to $1,784.1 million from $466.2 million, largely reflecting the retained China investment. Other intangible assets, such as acquired license rights and trademarks, were broadly stable at $169.6 million. Starbucks now holds more of its China exposure through an ownership stake and fewer directly consolidated café assets.
Source: FY2026 10-K, p. 47; Notes 1, 2 and 6–8, including the goodwill roll-forward on p. 72.
Receivables fell $100.0 million to $1,177.5 million, but this is not evidence of a $100 million cash collection benefit: the operating-cash statement shows receivables using $2.6 million. The year-end balances also reflect changes in business ownership and other noncash movements. These receivables mainly arise from licensees and packaged-product partners; café customers generally pay when ordering. Inventory rose to $2,243.4 million from $2,185.6 million despite China’s removal, leaving cash committed to coffee, merchandise and supplies. Starbucks values inventory mainly using an average of purchase costs, with reductions when expected selling value is lower.
Source: FY2026 10-K, pp. 47–48; Note 1, pp. 52 and 55; Note 5, p. 69.
Several operating liabilities should be distinguished from borrowing. The $5,582.6 million of long-term deferred revenue mainly represents services and brand access owed under the Nestlé agreement, for which cash was received years earlier. Separately, prepaid cards and loyalty rewards represented $1,678.7 million of obligations. Customers have paid, or earned rewards, before Starbucks provides the related products. These arrangements help finance operations but also require future service.
Bills and estimated obligations recorded as accrued liabilities increased $392.6 million, chiefly reflecting higher taxes payable and insurance reserves. Payroll and benefits still owed fell $202.6 million; the filing does not separate all causes of that decline. These balances show why changes in cash payments can differ from changes in expenses.
Other long-term liabilities rose $207.2 million. Cash held as security from financial counterparties increased $203.9 million and was recorded in that category. Starbucks holds this collateral under its financial contracts; receiving it does not create sales or profit.
Source: FY2026 10-K, p. 47; Note 1, p. 54; Note 7, p. 71; Note 11, pp. 75–76.
Debt maturities are spread across several years, with $1.5 billion due in fiscal 2027: $1.0 billion in February and $500 million in March. Contractual debt interest due within one year is another $472.1 million. Operating leases require $1,690.2 million of minimum payments in that period. Rent is already part of business operating cash flows, so it should not be subtracted again from an operating-cash-based spending analysis.
At year-end, cash plus short-term investments totaled $3,864.2 million. Starbucks also had an unused $3.0 billion revolving credit facility maturing in June 2030. Its commercial-paper program uses that same credit support and does not create another independent $3.0 billion of liquidity. The company reported compliance with its borrowing covenants, including a test of its ability to cover financing expenses. The filing does not provide a numerical cushion above that covenant threshold.
Source: FY2026 10-K, pp. 36–39; Note 9, pp. 73–75; Note 10, pp. 75–76.
Recorded liabilities still exceed recorded assets, producing negative book equity. Starbucks’ accumulated deficit reflects earlier dividends and share repurchases as well as earnings. In fiscal 2026, declared dividends exceeded net profit by $311.2 million, deepening the retained deficit. Employee-equity activity and changes in currency and hedging accounts more than offset that movement, improving total Starbucks shareholders’ equity by $427.5 million. Those accounting gains do not all represent new cash available to spend.
There were no share repurchases in fiscal 2026, and employee-related share issuance lifted shares outstanding from 1,136.9 million to 1,140.1 million. Average diluted shares increased 0.3%, slightly reducing the growth in earnings per share relative to net profit. Stock compensation added back in the cash-flow statement was $368.6 million. It preserved current cash but still represented compensation paid through ownership interests. Shares repurchased under Washington law are retired, explaining why Starbucks has no separate treasury-stock balance.
Source: FY2026 10-K, pp. 48–49; Note 1, p. 61; Notes 12, 13 and 15. The equity reconciliation appears in the calculation notes.
6. Next year’s plan needs cash growth as investment and buybacks resume
The next test is whether improving café economics can fund a larger set of cash commitments. For fiscal 2027, management targets approximately 4% North American comparable-sales growth and a 13.5%–14.0% adjusted operating margin. It forecasts a 1% revenue decline, including about $700 million from an extra, 53rd week. Comparable-sales guidance uses 52 weeks.
Source: Starbucks FY2026 results, October 29, 2026, “Fiscal Year 2027 Guidance” and non-GAAP disclosure. The margin target excludes certain costs; Starbucks says it cannot reliably reconcile it to a reported GAAP margin.
China retail sales were still consolidated during the first half of fiscal 2026. Their absence can therefore lower the next annual revenue total even while the remaining cafés grow. North America supplied 76.2% of fiscal 2026 revenue, making its service performance central to the company’s earnings and cash prospects.
The intended benefit of renewed investment is better service and more productive cafés. Plans include updated staffing, scheduling and point-of-sale systems, supply-chain improvements and further café refreshes. Management expects capital spending of approximately 5% of revenue and about $1 billion of share repurchases. It presents capital allocation as investment in the business, protection of its investment-grade balance sheet and support for the dividend, and describes planned buybacks as reflecting confidence in its business plan.
Sources: FY2026 10-K, pp. 29 and 38; October 29 earnings call, p. 10, spending and repurchase plans.
A simple sensitivity shows the funding requirement. Applying management’s revenue and capital-spending assumptions produces about $1.88 billion of capital spending. Holding the new quarterly dividend at $0.63 and shares at their September year-end level would require approximately $2.87 billion of annual dividends. Adding planned buybacks brings those three uses of cash to roughly $5.75 billion.
That exceeds fiscal 2026 operating cash by approximately $761 million, before the $1.5 billion of debt principal due in fiscal 2027. This is a flat-operating-cash illustration, not a prediction of a shortfall. Starbucks can improve operating cash, use its cash balance, refinance debt or change discretionary repurchases. The calculation shows why the return of buybacks makes cash growth more important, even after the China sale strengthened liquidity.
Calculation notes: In USD millions, projected revenue is 37,910.6 × 99% = 37,531.5; indicative capital spending is 37,531.5 × 5% = 1,876.6. The dividend assumption is 1,140.1 million shares × USD 0.63 × four payments = 2,873.1. Adding USD 1,000.0 million of planned repurchases gives 5,749.6. Compared with FY2026 operating cash of 4,988.4, the difference is 761.2. Actual dividends, share counts, repurchases, tax payments and operating cash may differ; buybacks would themselves reduce subsequent dividend requirements.
Sources: FY2026 10-K, pp. 47–48 and Note 9; FY2026 results, revenue guidance and dividend declaration; October 29 earnings call, p. 10, capital-spending and buyback plans.
Coffee costs remain one condition on that recovery. Starbucks reports that prices generally declined during fiscal 2026 but remained elevated relative to five years earlier. It had $279.6 million of fixed-price green-coffee commitments and an estimated $533.9 million of commitments whose prices were not yet fully fixed; futures contracts effectively fix part of the latter amount. Existing inventory and contracting mean market-price changes do not immediately become equal changes in café costs. Starbucks also received tariff refunds that largely offset related tariffs incurred during the first three quarters. That recovery of past costs should not be treated as a fresh recurring saving.
Source: FY2026 10-K, “Product Supply,” p. 9; liquidity discussion, p. 38; Note 5, p. 69.
The service strategy continues to require employee spending. In a November 12 update, Starbucks said more than 80% of eligible hourly employees in North American cafés were scheduled to receive the first quarterly reward payment on November 13. The program offers up to $300 a quarter when cafés meet specified sales, operating and service goals. This links additional compensation to the operating results management wants, but Starbucks did not disclose the aggregate payout in that update. Its financial effect cannot be calculated from participation alone.
Source: Starbucks, “Partners power Starbucks momentum—and share in its success,” November 12, 2026, first reward payout. The announcement describes a scheduled payment, not confirmation here that all payments had occurred by the research cutoff.
Two exposures deserve particular attention alongside the operating plan. First, the IRS issued final proposed adjustments for fiscal 2018 and 2019. Starbucks disputes them and retained its existing reserves. The company reported $130.9 million of tax benefits it had not recognized because their acceptance was uncertain, plus $38.8 million of accrued interest and penalties. These are company-wide balances, not a disclosed estimate of the two proposed adjustments; the filing does not state their dollar size.
Second, unions represented approximately 6% of U.S. company-operated cafés. Bargaining can affect the timing and terms of staffing and workplace changes central to the service plan. Note 16 says management regarded the risk of a material contingent loss from the described litigation as remote at filing. It supplies no material reasonably possible loss range. That assessment addresses legal losses; the operational work of agreeing and implementing changes remains relevant to the recovery.
Source: FY2026 10-K, labor risk discussion, pp. 17–18; Note 14, p. 82; Note 16, p. 83.
7. Starbucks has a stronger operating base, with a more demanding cash plan
The turnaround has progressed, but the next stage must turn better service into more cash after investment. Higher comparable transactions, improved operating profit and lower financing debt support a stronger business assessment than a year earlier. China’s partnership also reduces the amount of café investment Starbucks must fund directly while preserving participation in local growth.
The strongest limitation is that fiscal 2026’s improvement in cash after investment depended mainly on spending less, while profit benefited from changes in China’s accounting scope. With investment and buybacks scheduled to rise, the remaining cafés need to generate enough additional cash to cover those commitments and the taxes and restructuring payments still ahead. Continued transaction growth and control of service costs would strengthen that outcome. If cash growth disappoints, Starbucks has financing options, but less room to combine expansion, debt reduction and discretionary repurchases at the planned pace.
Reporting basis and calculation notes
Reporting basis: Starbucks Corporation and its controlled subsidiaries, U.S. GAAP, Form 10-K for the year ended September 27, 2026, filed November 12, 2026; SEC accession 0000829224-26-000162, CIK 0000829224. The annual comparison periods are September 29, 2025–September 27, 2026; September 30, 2024–September 28, 2025; and October 2, 2023–September 29, 2024. Each contains 52 weeks. Quarter-specific observations are labelled separately. The March 30, 2026 China divestiture changes which operations are included in full.
Sources: SEC filing, cover, Note 1 and Note 2; SEC filing-history data. Research includes the October 29 company results and call, the November 12 employee update, and the dated competitor releases cited above. The latest Starbucks disclosure reviewed is dated November 12; the November 13 payout remains a scheduled event in that source.
Calculation notes: Financial-statement checks. Monetary calculations below use USD millions. Source facts were matched to the selected accession, annual start/end dates and units. SEC XBRL corroborated revenue, operating profit, net profit attributable to Starbucks, cash, assets, liabilities, equity, operating cash, capital spending, dividends and diluted EPS. Cash was also checked against Starbucks’ definition of cash equivalents.
- Revenue growth: 37,910.6 ÷ 37,184.4 − 1 = 2.0%. Operating-profit growth: 3,691.1 ÷ 2,936.6 − 1 = 25.7%. Net-profit growth: 2,526.7 ÷ 1,856.4 − 1 = 36.1%.
- Operating margin is operating profit divided by revenue. Net margin uses profit attributable to Starbucks divided by revenue. Percentage-point changes in the narrative follow management’s rounded margin disclosures.
- Cash after investment increased by 3,724.8 − 2,442.0 = 1,282.8. Lower capital spending contributed 2,305.5 − 1,263.6 = 1,041.9, or 81.2% of that increase.
- The balance sheet balances in both years: FY2026 assets of 28,389.9 equal liabilities of 36,051.7 less total deficit of 7,661.8. FY2025 assets of 32,019.7 equal liabilities of 40,108.9 less total deficit of 8,089.2. Total deficit includes noncontrolling interests.
Source: FY2026 10-K, pp. 45–49; SEC company facts, selected filing and USD or USD-per-share units. Percentages are rounded after calculation.
Calculation notes: Why profit and operating cash differ. The following groups reproduce the fiscal 2026 cash-flow statement. Positive adjustments add back costs that reduced profit without an equal current cash payment, or reflect cash retained through payment timing.
| FY2026 operating-cash reconciliation; USD millions | Amount |
|---|---|
| Net profit including noncontrolling interests | 2,526.1 |
| Depreciation and amortization, stock compensation, and asset disposal/impairment adjustments | 2,649.1 |
| Remove China disposal gain | (536.3) |
| Joint-venture distributions less equity-method earnings | (109.8) |
| Noncash lease costs plus the change in lease liabilities | (327.5) |
| Deferred-tax adjustment | 144.4 |
| Other adjustments and operating-balance changes | 642.4 |
| Operating cash flow | 4,988.4 |
The 2,649.1 group comprises depreciation and amortization of 1,595.0, stock compensation of 368.6 and asset disposal, impairment and accelerated-amortization adjustments of 685.5. The lease adjustment combines noncash lease costs of 1,303.0 with a 1,630.5 reduction in lease liabilities; it adjusts rent already included in profit and is not total rent paid. The last group comprises receivables of −2.6, inventory of −176.4, taxes payable of +427.3, suppliers payable of +224.1, deferred revenue of −62.7, other operating assets/liabilities of +227.9 and other adjustments of +4.8.
The full cash check is opening cash of 3,219.8 + operating cash of 4,988.4 + investing cash of 1,112.6 − financing cash used of 5,644.7 + exchange effects of 3.8 = closing cash of 3,679.9. The statement reconciles cash and cash equivalents directly to the balance sheet and presents no separate restricted-cash addition. Cash equivalents include customer card and payment-processor receivables normally settled within two to five business days. Short- and long-term investments are outside this cash-flow cash balance.
Source: FY2026 10-K, p. 48 and Note 1, p. 52.
Calculation notes: Debt and lease commitments. The debt schedule uses principal that must be repaid, rather than its accounting carrying value.
| Debt principal by fiscal maturity; USD millions | Amount |
|---|---|
| FY2027 | 1,500.0 |
| FY2028 | 1,076.5 |
| FY2029 | 1,750.0 |
| FY2030 | 928.2 |
| FY2031 | 1,750.0 |
| Thereafter | 6,379.4 |
| Total principal | 13,384.1 |
The amount due to lenders is 13,384.1. Subtracting unamortized issuance costs and discounts of 85.5, and a 21.7 adjustment for the accounting treatment of interest-rate protection contracts, gives the recorded debt balance of 13,276.9. Scheduled contractual interest totals 5,130.9 over the remaining debt terms, including 472.1 within one year. The February and March 2027 notes carry coupons of 4.85% and 2.00%, respectively; the cost of refinancing them is not yet established.
Operating leases require minimum payments totaling 10,819.7 over their remaining lives. The balance sheet records those future payments at a lower present value: subtracting the 1,683.0 financing component gives a liability of 9,136.7. A further 525.8 of signed leases had not yet commenced. These minimum schedules exclude variable rent and some related occupancy costs. Actual FY2026 total lease expense was 3,150.6, including variable lease costs of 1,187.6. Restructuring lease accruals overlap lease liabilities and must not be added again as an entirely separate obligation.
Source: FY2026 10-K, material cash requirements, p. 39; Notes 9, 10 and 18.
Calculation notes: Shareholders’ deficit and customer prepayments. The following reconciliation isolates movements attributable to Starbucks shareholders, excluding noncontrolling interests.
| FY2026 change in Starbucks shareholders’ equity; USD millions | Amount |
|---|---|
| Opening shareholders’ deficit | (8,096.6) |
| Net profit less dividends declared | (311.2) |
| Increase in additional paid-in capital | 366.3 |
| Increase in accumulated other comprehensive income | 372.4 |
| Closing shareholders’ deficit | (7,669.1) |
Retained deficit tracks accumulated earnings after distributions and other retained-earnings entries. It reconciles as opening deficit of −8,272.5 + net profit of 2,526.7 − dividends declared of 2,837.9 = closing deficit of −8,583.7.
Additional paid-in capital includes share-issuance and employee-stock-compensation entries. Its opening balance of 634.1 + stock compensation of 372.9 − option/award-settlement entries of 52.6 + stock-sale entries of 46.0 = closing balance of 1,000.4. Common stock’s small stated legal value remained 1.1.
Accumulated other comprehensive income tracks certain currency, investment and hedging changes outside the normal profit total. Its 372.4 improvement includes 371.9 attributable to Starbucks through comprehensive income and a separate 0.5 equity movement. The China sale moved previously accumulated currency and hedging losses into earnings. Moving those old losses between accounts changes the reconciliation without creating cash.
Declared dividends of 2,837.9 differ from cash dividends paid of 2,824.7 because declarations and payments occur at different times. The cash-flow stock-compensation adjustment of 368.6 and the equity-statement entry of 372.9 are also distinct reported measures and have not been substituted for each other.
Prepaid-card and loyalty obligations reconcile as opening 1,751.7 + new deferred amounts of 15,130.7 − revenue recognized of 14,995.1 − other changes of 8.9 − China obligations removed of 199.7 = closing 1,678.7. This includes rewards earned as well as card loading, so the new deferred amount is not solely cash deposited by customers. Separately, Starbucks recognized 176.5 of revenue from Nestlé’s historic upfront royalty in each of FY2024–FY2026; that revenue did not bring a new equivalent cash payment in those years.
Source: FY2026 10-K, pp. 46–49; Notes 2, 11 and 12.
This report is for information and business analysis only. It is not investment advice or a recommendation to trade any security.
