Starbucks Q2 2025 Earnings: Revenue Up, Profits Down

Starbucks Corporation (NASDAQ: SBUX) reported its financial results for the second quarter of fiscal year 2025, posting a 2% increase in revenue to $8.8 billion, even as profitability dropped sharply due to rising costs and restructuring tied to its ongoing “Back to Starbucks” strategy.

The quarter, which ended on March 30, 2025, saw GAAP earnings per share fall 50% to $0.34, while non-GAAP EPS declined 40% to $0.41. Operating margin also compressed significantly amid investments in labor, technology, and corporate restructuring.

Key Q2 2025 Financial Highlights

• Revenue: $8.8 billion (up 2% YoY, or 3% in constant currency)

• GAAP EPS: $0.34 (down 50%)

• Non-GAAP EPS: $0.41 (down 40%)

• GAAP Operating Margin: 6.9%

• Non-GAAP Operating Margin: 8.2%

• Global Comparable Store Sales: Down 1%

• Net New Stores: 213

• Total Global Stores: 40,789

Starbucks CEO Brian Niccol expressed confidence in the company’s transformation strategy, saying, “My optimism has turned into confidence that our ‘Back to Starbucks’ plan is the right strategy to turn the business around and unlock opportunities ahead.”

North America: Higher Ticket Size, Fewer Transactions

Starbucks’ North America segment, which includes its core U.S. market, saw revenue increase just 1% to $6.47 billion. Comparable store sales declined 1%, with a 4% drop in transactions partially offset by a 3% rise in average ticket size.

Operating income fell 35% year-over-year to $748 million, as labor investments and lower transaction volume weighed on margins, which dropped from 18.0% to 11.6%.

International Markets: Growth with Pressure

The International segment performed better, with revenue rising 6% to $1.87 billion and 2% growth in comparable sales, driven by increased customer visits. However, average ticket dropped by 1%.

China, the company’s second-largest market, saw flat same-store sales as 4% more transactions were fully offset by a 4% decline in average ticket. China now accounts for 19% of Starbucks’ store count with 7,758 locations.

Operating income for the international segment decreased 7% to $217 million, and operating margin fell to 11.6%, impacted by increased promotions and organizational restructuring.

Channel Development and Consumer Packaged Goods

Starbucks’ Channel Development segment, which includes ready-to-drink and retail packaged coffee sold through grocery and convenience channels, saw a 2% decline in revenue to $409 million. Operating income fell 11% to $193.5 million, affected by higher product costs and lower contributions from partnerships.

Global Expansion and Store Footprint

Starbucks added 213 net new stores in the quarter, bringing the total to 40,789 locations across more than 80 countries. The U.S. and China together now represent 61% of the company’s global presence, with 17,122 stores in the U.S. and 7,758 in China.

Leadership and Organizational Updates

In March, Starbucks appointed Cathy Smith as Chief Financial Officer, replacing Rachel Ruggeri. The company also reduced 1,100 corporate support roles earlier in the quarter to streamline operations as part of its turnaround plan.

At its 33rd Annual Meeting of Shareholders, Starbucks recognized the retirement of long-time board member Mellody Hobson, with Jørgen Vig Knudstorp taking over as lead independent director.

Commitment to Shareholders

Despite profitability challenges, Starbucks continues its dividend streak, declaring a cash dividend of $0.61 per share payable on May 30, 2025. This marks the company’s 60th consecutive quarterly dividend, reflecting long-term shareholder value commitment.

Outlook: Recovery in Progress

Commenting on the results, CFO Cathy Smith noted: “While our financial results are far from Starbucks’ potential, we are building back a better business. We are developing new capabilities to test, iterate, and scale quickly, in service of long-term, durable growth.”