Starbucks’ second quarter results showed a mix of progress and ongoing challenges, as revenue growth exceeded Wall Street’s expectations but profit margins remained under pressure. Management attributed the quarter’s performance to investments in its “Back to Starbucks” plan, adding labor hours, and rolling out new operational standards. CEO Brian Niccol described these efforts as foundational, stating, “We’re fixing the operational foundations of the business and building a platform for innovation in 2026.” While international markets delivered solid gains, U.S. comparable sales remained subdued, with management emphasizing that early turnaround efforts are only just beginning to show results.
Is now the time to buy SBUX? Find out in our full research report (it’s free).
Starbucks (SBUX) Q2 CY2025 Highlights:
- Revenue: $9.46 billion vs analyst estimates of $9.30 billion (3.8% year-on-year growth, 1.7% beat)
- Adjusted EPS: $0.50 vs analyst expectations of $0.65 (22.6% miss)
- Adjusted EBITDA: $1.38 billion vs analyst estimates of $1.51 billion (14.6% margin, 8.4% miss)
- Operating Margin: 9.9%, down from 16.7% in the same quarter last year
- Locations: 41,097 at quarter end, up from 39,477 in the same quarter last year
- Same-Store Sales fell 2% year on year, in line with the same quarter last year
- Market Capitalization: $104.3 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Starbucks’s Q2 Earnings Call
- David Tarantino (Baird) asked about offsetting the $0.5 billion labor investment. CFO Cathy Smith said cost savings would come from multiple areas but full offsets may take several years, emphasizing a long-term view on margin recovery.
- David Palmer (Evercore ISI) questioned the timeline for achieving pre-pandemic operating margins. Smith and CEO Brian Niccol called 2019 a guidepost, but stressed that margin recovery depends on top-line growth and durable cost improvements.
- Lauren Silberman (Deutsche Bank) inquired about early traffic lifts from Green Apron Service and changes to the rewards program. Niccol noted positive morning and all-day transaction trends in test stores and said the new rewards program will shift from discounting to engagement.
- John Ivankoe (JPMorgan) probed how Starbucks can balance innovation with operational consistency. Niccol highlighted the “Starting 5” process, where new products are co-developed with baristas to ensure speed and quality are not compromised.
- Jon Tower (Citi) asked about menu architecture and pricing strategy for new product launches. Niccol emphasized maintaining Starbucks’ premium positioning but indicated flexibility in size and pricing to match customer occasions and preferences.
Catalysts in Upcoming Quarters
In the quarters ahead, our analysts will be watching (1) the effectiveness of the Green Apron Service rollout in driving transaction growth and customer satisfaction, (2) early signs of margin stabilization as cost-saving measures are implemented, and (3) progress in international markets, especially the development of a strategic partnership in China. New menu launches and updates to the loyalty program will also be key indicators of Starbucks’ ability to regain momentum.
Starbucks currently trades at $91.63, down from $92.95 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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