What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-29 compared with 2025-01-28 · 138 added, 82 removed, 227 unchanged (49% of the section changed)

5 unchanged sentences

Our forward-looking statements, and the risks and uncertainties related thereto, include, but are not limited to, those described under the “Risk Factors” and “Management ’ s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed 10-K and 10-Q and in other reports we file with the SEC, as well as, among others:

• our ability to preserve, grow, and leverage our brands, including the risk of negative responses by consumers (such as boycotts or negative publicity campaigns), governmental actors (such as retaliatory legislative treatment), or other third parties who object to certain actions taken or not taken by the Company, whose responses could adversely affect our brand value;

• our ability to preserve, grow, and leverage our brands, including the risk of negative responses by consumers (such as boycotts or negative publicity campaigns), governmental actors (such as retaliatory or threatened legislative treatment or other actions), or other third parties who object to certain actions taken or not taken by the Company, whose responses could adversely affect our brand value;

• the impact of our marketing strategies, promotional and advertising plans, pricing strategies, platforms, reformulations, innovations, or customer experience initiatives or investments;

7 unchanged sentences

• our anticipated cash requirements and operating expenses, including our anticipated total capital expenditures;

• inherent risks of operating a global business, including changing conditions in our markets, local factors affecting store openings, protectionist trade or foreign investment policies, economic or trade sanctions, compliance with local laws and other regulations, and local labor policies and conditions, including labor strikes and work stoppages;

• inherent risks of operating a global business, including changing conditions in our markets, local factors affecting store openings, protectionist trade or foreign investment policies, such as tariffs and other trade controls, economic or trade sanctions, compliance with local laws and other regulations, and local labor policies and conditions, including labor strikes and work stoppages;

• higher costs, lower quality, or unavailability of coffee, dairy, cocoa, energy, water, raw materials, or product ingredients;

22 unchanged sentences

Starbucks is the premier roaster, marketer, and retailer of specialty coffee globally, with a presence in 88 markets worldwide.

As of December 29, 2024, Starbucks had more than 40,500 company-operated and licensed stores, an increase of 5% from the prior year.

As of March 30, 2025, Starbucks had more than 40,700 company-operated and licensed stores, an increase of 5% from the prior year.

Additionally, we sell a variety of consumer-packaged goods, primarily through the Global Coffee Alliance established with Nestlé and other partnerships and joint ventures.

16 unchanged sentences

All references to store counts, including data for new store openings, are reported net of store closures, unless otherwise noted.

Starbucks results for the first quarter of fiscal 2025 reflect early progress toward our “Back to Starbucks” plan, as we focused on strategic actions, targeted investments, and operational efficiencies to drive gradual top-line improvements.

During the first quarter of fiscal 2025, consolidated net revenues were flat compared to the first quarter of fiscal 2024, primarily driven by a decline in global comparable store sales and lower product and equipment sales to our licensees, partially offset by incremental revenues from net new company-operated store openings over the past 12 months.

During the quarter ended December 29, 2024, our global comparable store sales declined 4%, primarily driven by a 4% decline in the U.S.

market and a 4% decline internationally.

Starbucks results for the second quarter of fiscal 2025 showed continued early progress on our “Back to Starbucks” strategy, as we focus on future growth and stronger returns on invested capital.

During the second quarter of fiscal 2025, consolidated net revenues increased 2% to $8.8 billion compared to $8.6 billion in the second quarter of fiscal 2024, primarily driven by incremental revenues from net new company-operated store openings over the past 12 months, partially offset by unfavorable foreign currency translation impacts and a decrease in global comparable store sales.

During the quarter ended March 30, 2025, our global comparable store sales declined 1%, primarily driven by a 2% decline in the U.S.

market, partially offset by a 2% improvement internationally.

Specific to the U.S.

market, the decrease in comparable store sales was driven by an 8% decrease in comparable transactions, partially offset by a 4% increase in average ticket, primarily due to annualization of pricing, attach, and fewer discounts.

These drivers more than offset mix shift into lower priced beverages, and the removal of the extra charge for non-dairy milk customizations.

Consolidated operating margin contracted 390 basis points from the prior year to 11.9%, primarily driven by deleverage, investments in support of “Back to Starbucks,” including store partner wages, benefits, and hours, and the removal of the extra charge for non-dairy milk customizations.

The contraction was partially offset by the annualization of pricing and supply chain efficiencies.

As we look ahead, for the balance of this fiscal year, we will continue to learn and implement our “Back to Starbucks” plan, building momentum from this first quarter of fiscal 2025.

We will continue to focus our efforts on making disciplined investments that align with our strategies of supporting our green apron partners, re-introducing Starbucks to the world, enhancing the customer experience to win the morning, and reestablishing ourselves as the community coffeehouse.

market, the decrease in comparable store sales was driven by a 4% decrease in comparable transactions, partially offset by a 3% increase in average ticket, primarily due to annualization of pricing and fewer discounts in the current year.

Consolidated operating margin contracted 590 basis points from the prior year to 6.9%, primarily driven by deleverage, additional labor, largely in support of “Back to Starbucks,” and restructuring costs related to simplifying our global support organization.

We expect that the balance of this fiscal year will bring some challenges as we navigate a dynamic macroeconomic environment, including tariffs and volatile coffee prices.

In each case, we are actively monitoring and taking actions where necessary to mitigate potential financial impacts, including further diversifying and redirecting coffee shipments to minimize tariffs, and, with respect to shifting coffee prices, opportunistically building our supply and securing pricing.

We are also evaluating our global store portfolio, new store pipeline, and operations, which may result in additional restructuring charges in the near term.

Going forward, we will focus on greater new store returns and enhancing the coffeehouse experience for both our partners and customers, while also reducing new store build costs.

Despite the challenging macroeconomic environment, we continue to feel confident in our “Back to Starbucks” strategy and will continue making intentional investments to stabilize the business and return to long-term, profitable growth.

Results of Operations (in millions)

Quarter Ended

Quarter Ended Two Quarters Ended

Company-operated stores $ 7,285.0 $ 7,052.6 $ 232.4 3.3 % $ 15,070.3 $ 14,807.9 $ 262.4 1.8 %

2 unchanged sentences

Total net revenues $ 8,761.6 $ 8,563.0 $ 198.6 2.3 % $ 18,159.4 $ 17,988.3 $ 171.1 1.0 %

For the quarter ended December 29, 2024 compared with the quarter ended December 31, 2023

Total net revenues for the first quarter of fiscal 2025 decreased $28 million, primarily due to lower revenues from licensed stores ($56 million), partially offset by an increase in revenues from company-operated stores ($30 million).

For the quarter ended March 30, 2025 compared with the quarter ended March 31, 2024

Total net revenues for the second quarter of fiscal 2025 increased $199 million, primarily due to higher revenues from company-operated stores ($232 million), partially offset by a decrease in revenues from licensed stores ($39 million).

Company-operated store revenue increased $232 million, primarily driven by incremental revenues from 1,283 net new company-operated stores, or a 6% increase, over the past 12 months ($296 million), and incremental revenue from the conversion of 113 licensed stores to company-operated stores ($30 million) following the acquisition of 23.5 Degrees Topco Limited, a U.K.

licensed business partner, during the quarter.

licensed business partner, during the first quarter of fiscal 2025.

These increases in net revenue were partially offset by a 1% decrease in comparable store sales ($49 million), attributable to a 2% decrease in comparable transactions, partially offset by a 1% increase in average ticket, as well as unfavorable foreign currency translation impacts ($48 million).

Licensed stores revenue decreased $56 million, primarily driven by lower product and equipment sales to our licensees ($39 million), the impact of the acquisition of 23.5 Degrees Topco Limited ($9 million), and unfavorable foreign currency translation impacts ($8 million).

Licensed stores revenue decreased $39 million, primarily driven by lower product and equipment sales to, and royalty revenues from, our licensees in our North America segment ($40 million), unfavorable foreign currency translation impacts ($11 million), and the impact of the acquisition of 23.5 Degrees Topco Limited ($8 million).

These decreases in licensed stores revenue were partially offset by an increase in product sales to, and royalty revenues from, our licensees in our International segment ($25 million).

For the two quarters ended March 30, 2025 compared with the two quarters ended March 31, 2024

Total net revenues for the first two quarters of fiscal 2025 increased $171 million, primarily due to higher revenues from company-operated stores ($262 million), partially offset by a decrease in revenues from licensed stores ($95 million).

Company-operated store revenue increased $262 million, primarily driven by incremental revenues from 1,283 net new company-operated stores, or a 6% increase, over the past 12 months ($598 million) and incremental revenue from the conversion of 113 licensed stores to company-operated stores ($57 million) following the acquisition of 23.5 Degrees Topco Limited.

These increases in net revenue were partially offset by a 2% decrease in comparable store sales ($331 million), attributable to a 4% decrease in comparable transactions, partially offset by a 2% increase in average ticket, as well as unfavorable foreign currency translation impacts ($66 million).

Licensed stores revenue decreased $95 million, primarily driven by lower product and equipment sales to, and royalty revenues from, our licensees in our North America segment ($74 million), unfavorable foreign currency translation impacts ($20 million), and the impact of the acquisition of 23.5 Degrees Topco Limited ($17 million).

These decreases in licensed stores revenue were partially offset by an increase in product sales to, and royalty revenues from, our licensees in our International segment ($22 million).

Operating Expenses

Quarter Ended

Quarter Ended Two Quarters Ended

Change Mar 30,

Total Net Revenues As a % of

Total Net Revenues

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General and administrative expenses 632.3 654.6 (22.3) 7.2 7.6 1,298.0 1,302.6 (4.6) 7.1 7.2

Restructuring 116.2 — 116.2 1.3 — 116.2 — 116.2 0.6 —

Total operating expenses 8,219.7 7,532.1 687.6 93.8 88.0 16,542.1 15,527.8 1,014.3 91.1 86.3

2 unchanged sentences

Store operating expenses as a % of company-operated stores revenue 57.3 % 52.8 % 55.6 % 51.2 %

For the quarter ended December 29, 2024 compared with the quarter ended December 31, 2023

Product and distribution costs as a percentage of total net revenues decreased 80 basis points for the first quarter of fiscal 2025, primarily due to supply chain efficiencies (approximately 70 basis points).

Store operating expenses as a percentage of total net revenues increased 380 basis points for the first quarter of fiscal 2025.

Store operating expenses as a percentage of company-operated stores revenue increased 430 basis points, primarily due to deleverage (approximately 260 basis points) and investments in support of “Back to Starbucks,” including store partner wages, benefits, and hours (approximately 190 basis points).

For the quarter ended March 30, 2025 compared with the quarter ended March 31, 2024

Product and distribution costs as a percentage of total net revenues increased 30 basis points for the second quarter of fiscal 2025, primarily due to inflation and rising coffee prices (approximately 60 basis points), partially offset by supply chain efficiencies (approximately 50 basis points).

Store operating expenses as a percentage of total net revenues increased 420 basis points for the second quarter of fiscal 2025.

Store operating expenses as a percentage of company-operated stores revenue increased 450 basis points, primarily due to deleverage (approximately 200 basis points) and additional labor, largely in support of “Back to Starbucks” (approximately 180 basis points).

Depreciation and amortization expenses as a percentage of total net revenues increased 50 basis points, primarily due to deleverage.

General and administrative expenses increased $18 million, primarily due to increased costs to support leadership transitions ($13 million) and incremental investments in technology ($10 million).

Income from equity investees decreased $9 million, primarily due to higher costs in our North American Coffee Partnership joint venture income.

The combination of these changes resulted in an overall decrease in operating margin of 390 basis points for the first quarter of fiscal 2025.

General and administrative expenses decreased $22 million, primarily due to lapping certain proxy solicitation and advisory services costs ($30 million).

Restructuring was $116 million, largely due to costs associated with simplifying our support organization, primarily severance costs, in support of our “Back to Starbucks” strategy.

The combination of these changes resulted in an overall decrease in operating margin of 590 basis points for the second quarter of fiscal 2025.

For the two quarters ended March 30, 2025 compared with the two quarters ended March 31, 2024

Product and distribution costs as a percentage of total net revenues decreased 30 basis points for the first two quarters of fiscal 2025, primarily due to supply chain efficiencies (approximately 60 basis points), partially offset by inflation and rising coffee prices (approximately 50 basis points).

Store operating expenses as a percentage of total net revenues increased 400 basis points for the first two quarters of fiscal 2025.

Store operating expenses as a percentage of company-operated stores revenue increased 440 basis points, primarily due to deleverage (approximately 230 basis points) and additional labor, largely in support of “Back to Starbucks” (approximately 160 basis points).

Depreciation and amortization expenses as a percentage of total net revenues increased 40 basis points, primarily due to deleverage.

General and administrative expenses decreased $5 million, primarily due to lapping certain proxy solicitation and advisory services costs ($30 million), partially offset by increased costs to support leadership transitions ($22 million).

Restructuring was $116 million, largely due to costs associated with simplifying our support organization, primarily severance costs, in support of our “Back to Starbucks” strategy.

Income from equity investees decreased $18 million, primarily due to lower income from our North American Coffee Partnership joint venture.

The combination of these changes resulted in an overall decrease in operating margin of 490 basis points for the first two quarters of fiscal 2025.

Other Income and Expenses

Quarter Ended

Quarter Ended Two Quarters Ended

Change Mar 30,

As a % of Total

Net Revenues As a % of Total

Operating income $ 601.0 $ 1,098.9 $ (497.9) 6.9 % 12.8 % $ 1,722.8 $ 2,584.3 $ (861.5) 9.5 % 14.4 %

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Net earnings including noncontrolling interests 384.1 772.5 (388.4) 4.4 9.0 1,165.1 1,796.9 (631.8) 6.4 10.0

Net earnings attributable to noncontrolling interests 0.1 — 0.1 0.0 0.0

Net earnings/(loss) attributable to noncontrolling interests

(0.1) 0.1 (0.2) 0.0 0.0 0.1 0.1 — 0.0 0.0

Net earnings attributable to Starbucks $ 384.2 $ 772.4 $ (388.2) 4.4 % 9.0 % $ 1,165.0 $ 1,796.8 $ (631.8) 6.4 % 10.0 %

Effective tax rate including noncontrolling interests 23.5 % 22.2 % 23.6 % 24.2 %

For the quarter ended December 29, 2024 compared with the quarter ended December 31, 2023

Interest income and other, net, decreased $6 million, primarily due to higher foreign currency exchange losses and lower interest rates in the current year.

For the quarter ended March 30, 2025 compared with the quarter ended March 31, 2024

Interest income and other, net, decreased $6 million, primarily due to lower interest rates in the current year.

Interest expense decreased $13 million, primarily due to savings from cross-currency interest rate hedging, partially offset by higher interest rates on refinanced long-term debt.

The effective tax rate for the quarter ended December 29, 2024 was 23.6% compared to 25.7% for the same period in fiscal 2024.

The decrease was primarily due to the discrete impact of a tax status change for a certain foreign entity (approximately 300 basis points).

The effective tax rate for the quarter ended March 30, 2025 was 23.5% compared to 22.2% for the same period in fiscal 2024.

The increase was primarily due to lapping the election of an alternative tax approach in a certain foreign jurisdiction that resulted in a tax benefit in the second quarter of fiscal 2024 (approximately 300 basis points), partially offset by the effect of lower pre-tax earnings and the proportionate impacts from certain permanent differences and discrete items.

For the two quarters ended March 30, 2025 compared with the two quarters ended March 31, 2024

Interest income and other, net, decreased $12 million, primarily due to lower interest rates in the current year.

Interest expense decreased $26 million, primarily due to savings from cross-currency interest rate hedging, partially offset by higher interest rates on refinanced long-term debt.

The effective tax rate for the first two quarters ended March 30, 2025 was 23.6% compared to 24.2% for the same period in fiscal 2024.

The decrease was primarily due to the discrete impact of a tax status change for a certain foreign entity

(approximately 200 basis points), partially offset by lapping the election of an alternative tax approach in a certain foreign jurisdiction that resulted in a tax benefit in the second quarter of fiscal 2024 (approximately 130 basis points).

Segment Information

1 unchanged sentence

North America

Quarter Ended

Quarter Ended Two Quarters Ended

Change Mar 30,

As a % of North America

Total Net Revenues As a % of North America

Total Net Revenues

9 unchanged sentences

General and administrative expenses 96.6 102.4 (5.8) 1.5 1.6 193.9 202.9 (9.0) 1.4 1.5

Restructuring 21.3 — 21.3 0.3 — 21.3 — 21.3 0.2 0.0

Total operating expenses 5,724.4 5,231.7 492.7 88.4 82.0 11,615.0 10,831.6 783.4 85.8 80.2

1 unchanged sentence

Store operating expenses as a % of company-operated stores revenue 58.5 % 53.1 % 56.3 % 51.1 %

For the quarter ended December 29, 2024 compared with the quarter ended December 31, 2023

North America total net revenues for the first quarter of fiscal 2025 decreased $49 million, or 1%, primarily due to a net 4% decrease in comparable store sales ($234 million), driven by an 8% decrease in comparable transactions, partially offset by a 4% increase in average ticket, primarily due to annualization of pricing, attach, and fewer discounts.

These drivers more than offset mix shift into lower priced beverages, and the removal of the extra charge for non-dairy milk customizations.

Also contributing to the decrease were lower product sales to, and royalty revenues from, our licensees ($35 million).

These decreases were partially offset by net new company-operated store growth of 5%, or 527 stores, over the past 12 months ($230 million).

For the quarter ended March 30, 2025 compared with the quarter ended March 31, 2024

North America total net revenues for the second quarter of fiscal 2025 increased $93 million, or 1%, primarily driven by net new company-operated store growth of 5%, or 504 stores, over the past 12 months ($226 million).

This growth was partially offset by a net 1% decrease in comparable store sales ($70 million), driven by a 4% decrease in comparable transactions, partially offset by a 3% increase in average ticket, primarily due to annualization of prior year pricing and fewer discounts in the current year.

Also contributing were lower product and equipment sales to, and royalty revenues from, our licensees ($40 million).

Operating Margin

North America operating income for the first quarter of fiscal 2025 decreased 22% to $1.2 billion, compared to $1.5 billion in the first quarter of fiscal 2024.

Operating margin contracted 470 basis points to 16.7%, primarily driven by deleverage (approximately 370 basis points) and investments in support of “Back to Starbucks,” including store partner wages, benefits, and hours (approximately 180 basis points), and the removal of the extra charge for non-dairy milk customizations (approximately 60 basis points).

This contraction in operating margin was partially offset by the annualization of pricing (approximately 230 basis points).

North America operating income for the second quarter of fiscal 2025 decreased 35% to $748 million, compared to $1.1 billion in the second quarter of fiscal 2024.

Operating margin contracted 640 basis points to 11.6%, primarily driven by deleverage (approximately 300 basis points) and additional labor, largely in support of “Back to Starbucks” (approximately 230 basis points).

For the two quarters ended March 30, 2025 compared with the two quarters ended March 31, 2024

North America total net revenues for the first two quarters of fiscal 2025 increased $44 million primarily driven by net new company-operated store growth 5%, or 504 stores, over the past 12 months ($456 million).

This growth was partially offset by a a net 3% decrease in comparable store sales ($304 million) driven by a 6% decrease in comparable transactions, partially offset by a 3% increase in average ticket, primarily due to annualization of prior year pricing and fewer discounts in the current year.

Also contributing were lower product and equipment sales to, and royalty revenues from, our licensees ($74 million).

Operating Margin

North America operating income for the first two quarters of fiscal 2025 decreased 28% to $1.9 billion, compared to $2.7 billion in the first two quarters of fiscal 2024.

Operating margin contracted 560 basis points to 14.2%, primarily driven by deleverage (approximately 330 basis points) and additional labor, largely in support of “Back to Starbucks” (approximately 190 basis points).

International

Quarter Ended

Quarter Ended Two Quarters Ended

As a % of International

Total Net Revenues As a % of International

Total Net Revenues

9 unchanged sentences

General and administrative expenses 84.8 82.9 1.9 4.5 4.7 177.2 173.3 3.9 4.7 4.8

Restructuring 16.8 — 16.8 0.9 — 16.8 — 16.8 0.4 —

Total operating expenses 1,649.9 1,523.7 126.2 88.4 86.7 3,283.6 3,128.6 155.0 87.8 86.8

3 unchanged sentences

Store operating expenses as a % of company-operated stores revenue 52.3 % 51.7 % 52.4 % 51.5 %

For the quarter ended December 29, 2024 compared with the quarter ended December 31, 2023

International total net revenues for the first quarter of fiscal 2025 increased $25 million, or 1%, primarily due to net new company-operated store growth of 9%, or 820 stores, over the past 12 months ($72 million), and the incremental net revenue from the conversion of 113 licensed stores to company-operated stores ($18 million) following the acquisition of 23.5 Degrees Topco Limited, a U.K.

licensed business partner, during the quarter.

The net revenue increases were partially offset by a 4% decline in comparable store sales ($48 million), driven by a 2% decline in both average ticket and comparable transactions, and unfavorable foreign currency translation impacts ($16 million).

Also contributing to the decrease in revenue were lower product and equipment sales to our licensees ($4 million), which were partially offset by the opening of 563 net new licensed stores over the past 12 months.

For the quarter ended March 30, 2025 compared with the quarter ended March 31, 2024

International total net revenues for the second quarter of fiscal 2025 increased $110 million, or 6%, primarily due to net new company-operated store growth of 8%, or 779 stores, over the past 12 months ($70 million) and higher product sales to, and royalty revenues from, our licensees ($25 million), primarily due to the opening of 497 net new licensed stores over the past 12 months.

Also contributing to the increase in revenues was the incremental net revenue from the conversion of 113 licensed

stores to company-operated stores ($22 million) following the acquisition of 23.5 Degrees Topco Limited, a U.K.

licensed business partner, during the first quarter of fiscal 2025, in addition to a 2% increase in comparable stores sales ($21 million), driven by a 3% increase in comparable transactions, partially offset by a 1% decrease in average ticket.

These increases were partially offset by unfavorable foreign currency translation impacts ($39 million).

Operating Margin

International operating income for the first quarter of fiscal 2025 decreased 2% to $237 million, compared to $242 million in the first quarter of fiscal 2024.

Operating margin contracted 40 basis points to 12.7%, primarily due to increased promotional activity (approximately 170 basis points) and investments in store partner wages and benefits (approximately 90 basis points).

This contraction was partially offset by supply chain efficiencies (approximately 130 basis points) and in-store operational efficiencies (approximately 100 basis points).

International operating income for the second quarter of fiscal 2025 decreased 7% to $217 million, compared to $234 million in the second quarter of fiscal 2024.

Operating margin contracted 170 basis points to 11.6%, primarily due to increased promotional activity (approximately 200 basis points) and restructuring costs (approximately 90 basis points), partially offset by leverage (approximately 170 basis points).

For the two quarters ended March 30, 2025 compared with the two quarters ended March 31, 2024

International total net revenues for the first two quarters of fiscal 2025 increased $135 million, or 4%, primarily due to net new company-operated store growth of 8%, or 779 stores, over the past 12 months ($142 million), and the incremental net revenue from the conversion of 113 licensed stores to company-operated stores ($41 million) following the acquisition of 23.5 Degrees Topco Limited during the first quarter of fiscal 2025.

Also contributing to the increase in revenues were higher product sales to, and royalty revenues from, our licensees ($22 million), primarily due to the opening of 497 net new licensed stores over the past 12 months.

These increases were partially offset by unfavorable foreign currency translation impacts ($55 million), as well as a 1% decrease in comparable store sales ($27 million), driven by a 2% decrease in average ticket, partially offset by a 1% increase in comparable transactions.

Operating Margin

International operating income for the first two quarters of fiscal 2025 decreased 4% to $454 million, compared to $475 million in the first two quarters of fiscal 2024.

Operating margin contracted 110 basis points to 12.1%, primarily due to increased promotional activity (approximately 190 basis points), partially offset by leverage (approximately 80 basis points).

Channel Development

Quarter Ended

Quarter Ended Two Quarters Ended

Change Mar 30,

As a % of Channel Development

Total Net Revenues As a % of Channel Development

Total Net Revenues

4 unchanged sentences

General and administrative expenses 1.2 1.9 (0.7) 0.3 0.5 3.1 4.2 (1.1) 0.4 0.5

Restructuring

0.9 — 0.9 0.2 — 0.9 — 0.9 0.1 —

Total operating expenses 274.8 269.7 5.1 67.2 64.5 549.9 563.7 (13.8) 65.1 65.1

1 unchanged sentence

Operating income $ 193.5 $ 216.3 $ (22.8) 47.3 % 51.7 % $ 401.6 $ 426.0 $ (24.4) 47.5 % 49.2 %

For the quarter ended December 29, 2024 compared with the quarter ended December 31, 2023

Channel Development total net revenues for the first quarter of fiscal 2025 decreased $12 million, or 3%, primarily due to a decline in revenue in the Global Coffee Alliance ($7 million) from product SKU optimization and lower revenue in our global ready-to-drink business ($3 million).

For the quarter ended March 30, 2025 compared with the quarter ended March 31, 2024

Channel Development total net revenues for the second quarter of fiscal 2025 decreased $9 million, or 2%, primarily due to a decline in revenue in the Global Coffee Alliance ($11 million), partially offset by higher revenue in our global ready-to-drink business ($5 million).

Operating Margin

Channel Development operating income for the first quarter of fiscal 2025 decreased 1% to $208 million, compared to $210 million in the first quarter of fiscal 2024.

Operating margin expanded 90 basis points to 47.7%, primarily driven by mix shift (approximately 180 basis points), and lower product costs related to the Global Coffee Alliance (approximately 80 basis points), partially offset by higher costs in our North American Coffee Partnership joint venture income (approximately 170 basis points).

Channel Development operating income for the second quarter of fiscal 2025 decreased 11% to $194 million, compared to $216 million in the second quarter of fiscal 2024.

Operating margin contracted 440 basis points to 47.3%, primarily driven by higher product costs related to the Global Coffee Alliance (approximately 390 basis points) and a decline in our North American Coffee Partnership joint venture income (approximately 170 basis points), partially offset by mix shift (approximately 160 basis points).

For the two quarters ended March 30, 2025 compared with the two quarters ended March 31, 2024

Channel Development total net revenues for the first two quarters of fiscal 2025 decreased $21 million, or 2%, primarily due to a decline in revenue in the Global Coffee Alliance ($18 million) and decreased ingredient sales to our North American Coffee Partnership joint venture ($10 million), partially offset by higher revenue in our global ready-to-drink business ($12 million).

Operating Margin

Channel Development operating income for the first two quarters of fiscal 2025 decreased 6% to $402 million, compared to $426 million in the first two quarters of fiscal 2024.

Operating margin contracted 170 basis points to 47.5%, primarily driven by a decline in our North American Coffee Partnership joint venture income.

Corporate and Other

Quarter Ended

Quarter Ended Two Quarters Ended

Net revenues:

5 unchanged sentences

General and administrative expenses 449.7 467.4 (17.7) (3.8) 923.8 922.2 1.6 0.2

Restructuring 77.2 — 77.2 nm 77.2 — 77.2 nm

Total operating expenses 570.6 507.0 63.6 12.5 1,093.6 1,003.9 89.7 8.9

2 unchanged sentences

Unallocated corporate expenses include corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment and are not included in the reported financial results of the operating segments.

For the quarter ended December 29, 2024 compared with the quarter ended December 31, 2023

Corporate and Other operating loss increased 4% to $505 million for the first quarter of fiscal 2025 compared to $487 million for the first quarter of fiscal 2024, primarily due to increased costs to support leadership transitions ($13 million) and incremental investments in technology ($10 million).

For the quarter ended March 30, 2025 compared with the quarter ended March 31, 2024

Corporate and Other operating loss increased 12% to $558 million for the second quarter of fiscal 2025 compared to $500 million for the second quarter of fiscal 2024, largely due to costs associated with restructuring our support organization, primarily severance costs, in support of our “Back to Starbucks” strategy.

For the two quarters ended March 30, 2025 compared with the two quarters ended March 31, 2024

Corporate and Other operating loss increased 8% to $1.1 billion for the first two quarters of fiscal 2025 compared to $986 million for the first two quarters of fiscal 2024, largely due to costs associated with restructuring our support organization, primarily severance costs, in support of our “Back to Starbucks” strategy.

Quarterly Store Data

1 unchanged sentence

Net stores opened/(closed) and transferred during the period

Quarter Ended Stores open as of

Quarter Ended Two Quarters Ended Stores open as of

North America

9 unchanged sentences

Total Company 213 364 590 913 40,789 38,951

(1) Includes the conversion of 113 licensed stores to company-operated stores following the acquisition of 23.5 Degrees Topco Limited during the first quarter of fiscal 2025.

(1) Net stores opened/(closed) and transferred during the period, for the two quarters ended March 30, 2025, includes the conversion of 113 licensed stores to company-operated stores following the acquisition of 23.5 Degrees Topco Limited during the first quarter of fiscal 2025.

Financial Condition, Liquidity, and Capital Resources

Cash and Investment Overview

Our cash and investments were $4.2 billion as of December 29, 2024 and $3.8 billion as of September 29, 2024.

Our cash and investments were $3.2 billion as of March 30, 2025 and $3.8 billion as of September 29, 2024.

We actively manage our cash and investments in order to internally fund operating needs, make scheduled interest and principal payments on our borrowings, fund acquisitions, and return cash to shareholders through common stock cash dividend payments and share repurchases.

Our investment portfolio primarily includes highly liquid available-for-sale securities, including corporate debt securities and government treasury securities (domestic and foreign), as well as principal-protected structured deposits.

As of December 29, 2024, approximately $2.1 billion of cash and short-term investments were held in foreign subsidiaries.

As of March 30, 2025, approximately $2.0 billion of cash and short-term investments were held in foreign subsidiaries.

Borrowing Capacity

9 unchanged sentences

The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses.

As of December 29, 2024, we were in compliance with all applicable covenants.

No amounts were outstanding under our 2021 credit facility as of December 29, 2024 or September 29, 2024.

As of March 30, 2025, we were in compliance with all applicable covenants.

No amounts were outstanding under our 2021 credit facility as of March 30, 2025 or September 29, 2024.

Commercial Paper

1 unchanged sentence

Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our 2021 credit facility.

The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures, and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock, and share repurchases.

We had no borrowings outstanding under our commercial paper

program as of December 29, 2024 and September 29, 2024.

Our total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of our first quarter of fiscal 2025.

dividends on our common stock, and share repurchases.

We had no borrowings outstanding under our commercial paper program as of March 30, 2025 and September 29, 2024.

Our total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of our second quarter of fiscal 2025.

Credit Facilities in Japan

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Borrowings under this credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.300%.

As of December 29, 2024 and September 29, 2024, we had no borrowings outstanding under these credit facilities.

As of March 30, 2025 and September 29, 2024, we had no borrowings outstanding under these credit facilities.

See Note 8, Debt, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for details of the components of our long-term debt.

Our ability to incur new liens and conduct sale and leaseback transactions on certain material properties is subject to compliance with terms of the indentures under which the long-term notes were issued.

As of December 29, 2024, we were in compliance with all applicable covenants.

As of March 30, 2025, we were in compliance with all applicable covenants.

We expect to use our available cash and investments, including, but not limited to, additional potential future borrowings under the credit facilities, commercial paper program, and the issuance of debt to support and invest in our core businesses, including investing in new ways to serve our customers and supporting our store partners, repaying maturing debts, returning cash to shareholders through common stock cash dividend payments and discretionary share repurchases, and investing in new business opportunities related to our core and developing businesses.

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Any foreign earnings that are not indefinitely reinvested may be repatriated at management’s discretion.

During the first quarter of fiscal 2025, our Board of Directors approved a quarterly cash dividend to shareholders of $0.61 per share to be paid on February 28, 2025 to shareholders of record as of the close of business on February 14, 2025.

During the quarter ended December 29, 2024, we made no common stock share repurchases.

As of December 29, 2024, 29.8 million shares remained available for repurchase under current authorizations.

During the second quarter of fiscal 2025, our Board of Directors approved a quarterly cash dividend to shareholders of $0.61 per share to be paid on May 30, 2025 to shareholders of record as of the close of business on May 16, 2025.

During the two quarters ended March 30, 2025, we made no common stock share repurchases.

As of March 30, 2025, 29.8 million shares remained available for repurchase under current authorizations.

Other than normal operating expenses, cash requirements for the remainder of fiscal 2025 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our supply chain, and corporate facilities.

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There have been no material changes to our material cash requirements during the period covered by this 10-Q outside of the normal course of our business.

Net cash provided by operating activities was $2.1 billion for the first quarter of fiscal 2025, compared to $2.4 billion for the same period in fiscal 2024.

The change was primarily due to a decrease in net earnings of $244 million and a net increase of $149 million in inventories, which was primarily driven by a net increase in green coffee inventories.

Net cash used in investing activities totaled $855 million for the first quarter of fiscal 2025, compared to $569 million for the same period in fiscal 2024.

The change was primarily due to the acquisition of 23.5 Degrees Topco Limited, a net decrease of $166 million in maturities and calls of investments, primarily structured deposit investments, and a net increase of $97 million in capital expenditures.

These cash uses were partially offset by a net decrease of $151 million in purchases of investments, primarily structured deposit investments.

Net cash used in financing activities for the first quarter of fiscal 2025 totaled $755 million, compared to $2.4 billion for the same period in fiscal 2024.

The change was primarily due to no current year share repurchases of our common stock and no current year repayments of long-term debt compared to repurchases and repayments in the prior year.

These cash uses were partially offset by a decrease of $300 million in proceeds from issuances of commercial paper.

Net cash provided by operating activities was $2.4 billion for the first two quarters of fiscal 2025, compared to $2.9 billion for the same period in fiscal 2024.

The change was primarily due to a decrease in net earnings of $632 million and a net increase of $346 million in inventories, which was primarily driven by green coffee, partially offset by a net decrease of $391 million in accounts payable, primarily due to payment timing.

Net cash used in investing activities totaled $1.5 billion for the first two quarters of fiscal 2025, compared to $1.3 billion for the same period in fiscal 2024.

The change was primarily due to the acquisition of 23.5 Degrees Topco Limited and a net decrease of $56 million in cash provided by investment activity, primarily structured deposit investments.

Net cash used in financing activities for the first two quarters of fiscal 2025 totaled $1.4 billion, compared to $2.4 billion for the same period in fiscal 2024.

The change was primarily due to no current year issuances or repayments of long-term debt and no current year share repurchases of our common stock compared to the prior year.

Commodity Prices, Availability and General Risk Conditions

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In addition to coffee, we also purchase significant amounts of dairy products to support the needs of our company-operated stores.

The price and availability of these commodities, including recent sustained increases in green coffee prices, directly impact our results of operations, and we expect commodity prices, particularly coffee, to continue to impact future results of operations.

The price and availability of these commodities, including recent increases in green coffee prices, directly impact our results of operations, and we expect commodity prices, particularly coffee, to continue to impact future results of operations.

For additional details, see Product Supply in Part 1, Item 1 of the 10-K, as well as Risk Factors in Part I, Item 1A of the 10-K.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis