Starbucks reported adjusted earnings of $0.85 per share in fiscal Q3, a 70% year-over-year increase that beat analyst estimates. Revenue held steady at $9.3 billion, while global comparable-store sales rose 7.9% — the fourth consecutive quarter of gains. Shares jumped more than 3% to roughly $107, putting the stock within 1% of its 52-week closing high of $108.37 set on July 16.
Margin recovery and store upgrades
Operating margin expanded 430 basis points to 14.4%, and North America margin grew for the first time since early fiscal 2024. CEO Brian Niccol is pushing that momentum further: he targets 1,500 upgraded store locations by the end of the fiscal year. The company has not detailed the cost of those renovations, but the margin improvement suggests investors are betting the investment will pay off.
International licensing and the China joint venture
Starbucks finalized a China joint venture in April, part of a broader strategy to keep direct control only over the U.S. and Canada. Roughly 90% of the company’s nearly 23,000 international stores operate under licensing deals, a model that limits capital outlay but also reduces per-store revenue. The China JV gives Starbucks a local partner in its second-largest market, where competition from Luckin Coffee and local chains has been intense.
Cost cuts cheered by Wall Street
Layoffs that occurred earlier this year were welcomed by investors as evidence of cost discipline. Jim Cramer raised his price target on the stock to $120 from $115, calling it a 'buy.' The stock is up about 26% year to date and has not closed above $110 since January 2025.
The tariff refund risk
One potential headwind: the North America margin gains may not hold once tariff refunds fade. The company has not disclosed the size of those refunds or how long they will continue. If the margin improvement was partly a one-time benefit from tariff adjustments, the underlying cost structure may not be as lean as the Q3 numbers suggest.
Starbucks shares closed near $107 on the day of the earnings release, just $1.37 below the 52-week closing high. Whether the stock can break above $110 for the first time in more than two years will depend on whether the company can sustain its margin recovery without the tariff tailwind.
