What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-07-29 compared with 2026-04-28 · 192 added, 150 removed, 257 unchanged (57% of the section changed)

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

• the costs and risks associated with, and the successful and timely execution and effects of, our existing and any future business opportunities, expansions, initiatives, strategies, investments, and plans, including our “ Back to Starbucks ” strategy and our restructuring plan;

• the costs and risks associated with, and the successful and timely execution and effects of, our existing and any future business opportunities, expansions, initiatives, strategies, investments, transformation efforts, and plans, including our “ Back to Starbucks ” strategy and our restructuring plans;

• the costs and risks associated with, and the successful execution and effects of, strategic changes to our ownership and operating structure, including as a result of acquisitions, divestitures, other strategic transactions or entry into joint ventures, including our joint venture with respect to Starbucks retail operations in China;

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local factors affecting store openings;

protectionist trade or foreign investment policies, such as tariffs and import/export regulations;

economic or trade sanctions;

protectionist trade or foreign investment policies, including trade restrictions, tariffs, quotas, import/export regulations, customs restrictions, sanctions, countersanctions, and retaliatory measures;

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 and related volatility;

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

• the ability of our supply chain to meet current or future business needs and our ability to scale and improve our forecasting, planning, production, and logistics management;

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or entry or expansion in our geographic markets;

• evolving corporate governance and public disclosure regulations and expectations;

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• evolving corporate governance and public disclosure regulations and expectations, including with respect to sustainability matters;

• the potential impact of activist shareholder actions or tactics;

• failure to comply with applicable laws and complex and changing legal and regulatory requirements, including in privacy and data protection;

• failure to comply with applicable laws and complex and changing legal and regulatory requirements, including those governing privacy, data protection, artificial intelligence, and other emerging technologies;

• the impact or likelihood of significant legal disputes and proceedings or government investigations;

• the unauthorized access, use, theft, or destruction of our data, or of our proprietary or confidential information and the impact thereof;

• potential negative effects of, and our ability to respond to, a material failure, inadequacy, or interruption of our information technology systems or those of our third-party business partners or service providers, or failure to comply with data protection laws;

• the unauthorized access, use, theft, or destruction of our data, or of our proprietary or confidential information, including as a result of increasingly sophisticated threats enabled or accelerated by artificial intelligence, and the impact thereof;

• potential negative effects of, and our ability to respond to, a material failure, inadequacy, or interruption of our information technology systems or digital platforms, or those of our third-party business partners or service providers, or failure to comply with data protection laws;

• our ability to adequately protect our intellectual property or adequately ensure that we are not infringing the intellectual property of others.

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This information should be read in conjunction with the unaudited consolidated financial statements and the notes included in Item 1 of Part I of this 10-Q, as well as the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in the 10-K.

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Introduction and Overview

Starbucks is the premier roaster, marketer, and retailer of specialty coffee globally, with a presence in 90 markets worldwide.

As of March 29, 2026, Starbucks had more than 41,000 company-operated and licensed stores, an increase of 1% from the prior year.

As of June 28, 2026, Starbucks had more than 41,000 company-operated and licensed stores, an increase of 1% 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.

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

Starbucks results for the second quarter of fiscal 2026 showed continued progress and momentum on key “Back to Starbucks” initiatives, as demonstrated through meaningful revenue growth.

These investments included the Green Apron Service standard to improve the coffeehouse experience, engaging consumer marketing, disciplined menu innovation, and a redesigned Starbucks Rewards program, all of which deliver greater connection, consistency, and value for customers.

During the second quarter of fiscal 2026, consolidated net revenues increased 9% to $9.5 billion compared to $8.8 billion in the second quarter of fiscal 2025, primarily due to a 6.2% increase in global comparable store sales, driven by a 7.1% increase in the U.S.

market and a 2.6% increase internationally.

Also contributing to the increase was higher revenues from the Global Coffee Alliance and our licensed store business.

Starbucks results for the third quarter of fiscal 2026 showed continued progress and momentum on key “Back to Starbucks” initiatives, as demonstrated through continued global comparable store sales growth, consolidated operating margin expansion, and improved customer engagement.

These initiatives included the Green Apron Service standard to improve operational consistency and the coffeehouse experience, engaging consumer marketing, disciplined menu innovation, a redesigned Starbucks Rewards program, and coffeehouse uplifts, all of which are intended to deliver greater connection, consistency, and value for customers.

During the third quarter of fiscal 2026, consolidated net revenues decreased 1% to $9.3 billion compared to $9.5 billion in the third quarter of fiscal 2025, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.

The decline in consolidated revenues was offset by a 7.9% increase in global comparable store sales, driven by a 7.9% increase in the U.S.

Also contributing to the offset was higher revenues from our international licensed store business.

Specific to the U.S.

market, the increase in comparable store sales was driven by a 4.3% increase in comparable transactions and a 2.7% increase in average ticket, primarily driven by higher delivery sales in the current year.

Consolidated operating margin expanded 180 basis points from the prior year to 8.7%, primarily driven by sales leverage and lower store operating and depreciation and amortization costs after classifying assets for Starbucks retail operations in China as held for sale, partially offset by labor investments largely in support of “Back to Starbucks.”

In support of our “Back to Starbucks” strategy, as part of the restructuring plan announced in the fourth quarter of fiscal 2025, we continued to close stores that did not demonstrate a viable path to profitability or meet our standards of delivering a warm, welcoming space for our customers and partners.

market, the increase in comparable store sales was driven by a 4.2% increase in comparable transactions and a 3.6% increase in average ticket, primarily driven by higher delivery sales and strength in customer food attach and beverage modifications.

Consolidated operating margin expanded 60 basis points from the prior year to 10.5%, primarily driven by sales leverage and lower inflation paired with tariff refunds, offset by higher restructuring costs and labor investments largely in support of “Back to Starbucks.”

Divestiture of Starbucks Retail Operations in China

In the first quarter of fiscal 2026, we announced that the Company entered into an agreement to form a joint venture with Boyu Capital to operate Starbucks retail in China (the “disposal group”), marking a significant milestone in the Company’s long-term strategy to unlock sustainable, disciplined growth in one of the Company’s critical growth markets.

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In the third quarter of fiscal 2026, the transaction closed, and under the terms of the agreement, funds managed by Boyu Capital acquired a 60% stake in Starbucks China retail operations, while Starbucks retained a 40% ownership interest and continues to own and license the brand and intellectual property to the joint venture.

The disposal group was deconsolidated from our financial statements and we transitioned from recording revenues and expenses of the disposal group to recording our share of income from the joint venture, recognized as income from equity investees under the equity method of accounting.

We expect that the conversion to our licensed joint venture model will continue to drive lower revenues and higher operating margin for Starbucks, as compared to the historical, company-operated model.

We used a portion of our transaction proceeds for debt reduction, strengthening our balance sheet and allowing us to execute our long-term growth strategy with greater financial flexibility.

The joint venture is expected to reinvigorate sustainable growth in China through a focus on expansion, innovation and elevated customer experiences, with a shared long-term aspiration to grow to as many as 20,000 locations in China over time.

By bringing together the trusted Starbucks brand, and Boyu Capital’s deep local expertise, we believe we will be able to serve more customers, enter more cities, strengthen profitability, and better compete in China’s dynamic and evolving market.

Restructuring

In support of our “Back to Starbucks” strategy, as part of the restructuring plan announced in the fourth quarter of fiscal 2025, we closed stores that did not demonstrate a viable path to profitability or meet our standards of delivering a warm, welcoming space for our customers and partners.

Those store closures in North America were substantially completed in fiscal 2025, and the majority of those International store closures were completed in the first quarter of fiscal 2026.

With a healthier base of coffeehouses, we expect meaningful opportunity for disciplined growth.

We anticipate that these actions, along with our simplified broader support organization, will allow us to restructure, redeploy, and refocus our resources on priorities that we believe will deliver long-term sustainable business growth.

In the second quarter of fiscal 2026, management approved a restructuring plan to relocate certain functions of our support organization to an additional office in Nashville, Tennessee, further supporting the Company’s “Back to Starbucks” strategy and the intention to establish a more strategic presence in the Southeast region of the United States.

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proximity to key suppliers, access to a deep and growing talent pool in the region, notably in technology, and alignment with where we expect future coffeehouse growth.

As the fiscal year progresses, we will continue to refine and execute our “Back to Starbucks” initiatives to continue topline momentum and build sales leverage while investing in our cafes and customer experience, delivering seamless digital experiences, strengthening our supply chain, and enabling technological efficiencies.

We will continue to amplify our brand, engaging with our customers authentically and distinctly as Starbucks, through broad-based marketing, with the goal of deepening brand loyalty and affinity.

As our international business shifts toward a more predominantly licensed model, we will look toward strengthening how we support our licensed business partners.

Our approach will strive to bring decision-making closer to customers and local markets, while enabling us to focus on establishing standards and best practices.

We expect certain macroeconomic pressures to alleviate in the second half of the fiscal year, including impacts on product and distribution costs from tariffs and elevated coffee pricing.

In the third quarter of fiscal 2026, we announced an additional fiscal 2026 restructuring plan focused on further transformation of our global support organization and non-retail facilities, as well as reducing the future operational complexity of our Starbucks Reserve and Roastery locations resulting in a reassessment and impairment of the associated asset group.

Under the plan, the Company expects to capture cost savings through a more streamlined support structure, and a simplified operating model for Starbucks Reserve and Roastery locations.

Strategic Initiatives

As the fiscal year progresses, we will continue to refine and execute our “Back to Starbucks” initiatives to drive topline momentum and build sales leverage while investing in our cafes and customer experience, with a focus on delivering exceptional service with speed, providing seamless digital experiences, strengthening our supply chain, and enabling technological efficiencies.

We will continue to amplify our brand, engaging with our customers authentically and distinctly as Starbucks, through broad-based marketing, menu innovation, and Starbucks Rewards engagement, with the goal of deepening customer connection, brand loyalty and affinity.

As our international business shifts toward a more predominantly licensed model, we will continue evolving how we support our licensed business partners.

We expect our international business to be a meaningful contributor to coffeehouse growth over time, supported by our licensed business model and significant opportunities for development in markets globally.

We will apply continued discipline to how we grow our global footprint, with a focus on ensuring new coffeehouses meet our expectations for returns and long-term growth.

We expect certain macroeconomic pressures to continue easing into the fourth quarter, including impacts on product and distribution costs from tariffs and elevated coffee pricing.

While we believe we are making the right strategic investments to improve our operating foundations, our focus going forward will be on driving consistency at scale while balancing and maintaining a healthier cost structure.

We will continue to test, learn, and refine our approach to deliver the best of Starbucks to drive durable, profitable, long-term growth.

In November, we announced that the Company entered into an agreement to form a joint venture with Boyu Capital to operate Starbucks retail in China (the “disposal group”), marking a significant milestone in the Company’s long-term strategy to unlock sustainable, disciplined growth in one of the Company’s critical growth markets.

During the first quarter of fiscal 2026, we classified the assets and liabilities of the disposal group as held for sale on the consolidated balance sheets and the disposal group remained classified as held for sale as of March 29, 2026.

The classification required us to cease property, plant, and equipment depreciation and operating lease ROU asset amortization of the related long-lived assets, resulting in reduced depreciation and amortization and store operating expenses, which were reflected through the close of the transaction.

We also changed our indefinite reinvestment assertions upon classification as held for sale resulting in an increase in our income tax expense.

On March 30, 2026, in the third quarter of fiscal 2026, the transaction subsequently closed, and under the terms of the agreement, funds managed by Boyu Capital acquired a 60% stake in Starbucks China retail operations, while Starbucks retained a 40% ownership interest and continues to own and license the brand and intellectual property to the joint venture.

The joint venture oversees 7,991 company-operated coffeehouses, which transitioned to a licensed operating model, with a shared long-term aspiration to grow to as many as 20,000 locations over time.

Further, Starbucks and Boyu Capital transitioned into the operational phase of the joint venture, with a focus on expansion, innovation, and delivering exceptional coffee and welcoming experiences to customers across China.

We transitioned from recording revenues and expenses of the disposal group to recording our share of income from the joint venture, recognized as income from equity investees under the equity method of accounting.

This transition will result in lower revenues and higher operating margin for Starbucks beginning in the third quarter of fiscal 2026, as compared to the historical, company-operated model.

The disposal group was deconsolidated from our financial statements and will be reported as part of our licensed portfolio in the third quarter.

We currently plan to use our transaction proceeds for debt reduction, strengthening our balance sheet and allowing us to execute our long-term growth strategy with greater financial flexibility.

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Results of Operations (in millions)

Quarter Ended Two Quarters Ended

Quarter Ended Three Quarters Ended

Company-operated stores $ 7,506.1 $ 7,812.5 $ (306.4) (3.9) % $ 23,510.6 $ 22,882.9 $ 627.7 2.7 %

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Total net revenues $ 9,322.7 $ 9,456.0 $ (133.3) (1.4) % $ 28,769.3 $ 27,615.4 $ 1,153.9 4.2 %

For the quarter ended March 29, 2026, compared with the quarter ended March 30, 2025

Total net revenues for the second quarter of fiscal 2026 increased $770 million, primarily due to higher revenues from company-operated stores ($531 million) and other revenues ($166 million).

Company-operated stores revenue increased $531 million, primarily driven by a 6.2% increase in comparable store sales ($433 million) attributable to a 3.8% increase in comparable transactions and a 2.3% increase in average ticket.

Also contributing to the overall increase in company-operated stores revenue were incremental revenues from 52 net-new company-operated stores over the past 12 months ($50 million).

Licensed stores revenue increased $72 million, primarily driven by higher product sales to, and royalty revenues from, our licensees ($86 million), partially offset by lower equipment sales to licensees ($15 million).

For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025

Total net revenues for the third quarter of fiscal 2026 decreased $133 million, primarily due to lower revenues from company-operated stores ($306 million) partially offset by higher licensed stores ($95 million) and other revenues ($78 million).

Company-operated stores revenue decreased $306 million, primarily driven by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($776 million) and unfavorable foreign currency impacts ($52 million).

This was partially offset by a 7.9% increase in comparable store sales ($524 million) attributable to a 4.2% increase in comparable transactions and a 3.5% increase in average ticket.

Licensed stores revenue increased $95 million, primarily driven by higher product sales to, and royalty revenues from, our existing licensees ($58 million) and our newly-formed China joint venture ($53 million) following the conversion of Starbucks retail operations in China to our licensed joint venture model, partially offset by lower equipment sales to licensees ($16 million).

Other revenues increased $78 million, primarily due to an increase in revenue in the Global Coffee Alliance ($89 million).

For the two quarters ended March 29, 2026, compared with the two quarters ended March 30, 2025

Total net revenues for the first two quarters of fiscal 2026 increased $1.3 billion, primarily due to higher revenues from company-operated stores ($934 million) and other revenues ($286 million).

Company-operated stores revenue increased $934 million, primarily driven by a 5.0% increase in comparable store sales ($726 million) attributable to a 3.3% increase in comparable transactions and a 1.7% increase in average ticket.

Also contributing to the overall increase in company-operated stores revenue were incremental revenues from 52 net-new company-operated stores over the past 12 months ($149 million).

Licensed stores revenue increased $67 million, primarily driven by higher product sales to, and royalty revenues from, our licensees in our International segment ($132 million).

The increase in licensed stores revenue was partially offset by lower equipment sales to our licensees globally ($36 million) and a decrease in product sales to, and royalty revenues from, our licensees in our North America segment ($29 million).

Other revenues increased $286 million, primarily due to an increase in revenue in the Global Coffee Alliance ($222 million) and increased sales of cocoa butter to third parties ($34 million).

For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025

Total net revenues for the first three quarters of fiscal 2026 increased $1.2 billion, primarily due to higher revenues from company-operated stores ($628 million), other revenues ($364 million), and licensed stores ($162 million).

Company-operated stores revenue increased $628 million, primarily driven by a 5.9% increase in comparable store sales ($1.2 billion) attributable to a 3.6% increase in comparable transactions and a 2.3% increase in average ticket.

This was partially offset by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($729 million).

Licensed stores revenue increased $162 million, primarily driven by higher product sales to, and royalty revenues from, our existing licensees in our International segment ($182 million) and our newly-formed China joint venture ($53 million) following the conversion of Starbucks retail operations in China to our licensed joint venture model.

This was partially offset by lower equipment sales to our licensees globally ($52 million) and a decrease in product sales to, and royalty revenues from, our licensees in our North America segment ($21 million).

Other revenues increased $364 million, primarily due to an increase in revenue in the Global Coffee Alliance ($311 million).

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Operating Expenses

Quarter Ended Two Quarters Ended

Change Mar 29,

Quarter Ended Three Quarters Ended

Change Jun 28,

Total Net Revenues As a % of

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55.9 % 55.6 % 56.0 % 55.6 %

For the quarter ended March 29, 2026, compared with the quarter ended March 30, 2025

Product and distribution costs as a percentage of total net revenues increased 250 basis points for the second quarter of fiscal 2026, largely due to mix shift (90 basis points) and inflationary pressures (approximately 90 basis points), primarily driven by elevated coffee pricing and tariffs.

Store operating expenses as a percentage of total net revenues decreased 140 basis points for the second quarter of fiscal 2026.

Store operating expenses as a percentage of company-operated stores revenue decreased 90 basis points, primarily due to sales leverage (330 basis points), partially offset by labor investments largely in support of “Back to Starbucks” (approximately 230 basis points).

For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025

Product and distribution costs as a percentage of total net revenues decreased 100 basis points for the third quarter of fiscal 2026, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 (approximately 130 basis points), lower inflation paired with tariff refunds (approximately 80 basis points), partially offset by mix shift (approximately 110 basis points).

Store operating expenses as a percentage of total net revenues decreased 90 basis points for the third quarter of fiscal 2026.

Store operating expenses as a percentage of company-operated stores revenue increased 30 basis points, primarily due to labor investments largely in support of “Back to Starbucks” (approximately 190 basis points), and increased reserves for self-insured claims (approximately 100 basis points), partially offset by sales leverage (approximately 250 basis points).

Other operating expenses decreased $20 million, primarily due to savings from simplifying our licensed business support organization ($15 million).

Depreciation and amortization expenses as a percentage of total net revenues decreased 100 basis points, primarily as a result of ceasing depreciation upon classifying our Starbucks retail operations in China as held for sale.

General and administrative expenses decreased $14 million, primarily due to restructuring-related savings ($44 million), partially offset by increases in performance-based compensation ($27 million).

Restructuring and impairments decreased $91 million, largely due to lapping costs associated with the simplification of our support organization in the prior year.

See Note 17 , Restructuring, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for further discussion.

Income from equity investees decreased $8 million, primarily due to income from our North American Coffee Partnership joint venture.

The combination of these changes resulted in an overall increase in operating margin of 180 basis points for the second quarter of fiscal 2026.

For the two quarters ended March 29, 2026, compared with the two quarters ended March 30, 2025

Product and distribution costs as a percentage of total net revenues increased 230 basis points for the first two quarters of fiscal 2026, largely due to inflationary pressures (approximately 120 basis points), primarily driven by elevated coffee pricing and tariffs, and mix shift (70 basis points).

Store operating expenses as a percentage of total net revenues was flat for the first two quarters of fiscal 2026.

Store operating expenses as a percentage of company-operated stores revenue increased 40 basis points, primarily due to labor investments largely in support of “Back to Starbucks” (approximately 230 basis points), offset by sales leverage (approximately 240 basis points).

Depreciation and amortization expenses as a percentage of total net revenues decreased 60 basis points, primarily driven by the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.

General and administrative expenses decreased $78 million, primarily due to lapping of the Leadership Experience 2025 ($81 million), restructuring-related savings ($63 million), and the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($42 million).

This was partially offset by increases in performance-based compensation ($79 million) and transaction-related expenses related to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($44 million).

Restructuring and impairments increased $282 million, largely due to costs associated with the impairment of Starbucks Reserve and Roastery store locations, and partner severance costs.

See Note 17 , Restructuring and Impairments, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for further discussion.

Income from equity investees increased $22 million, primarily due to income from our China joint venture, which was formed upon the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.

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The combination of these changes resulted in an overall increase in operating margin of 60 basis points for the third quarter of fiscal 2026.

For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025

Product and distribution costs as a percentage of total net revenues increased 130 basis points for the first three quarters of fiscal 2026 largely due to mix shift (80 basis points).

Store operating expenses as a percentage of total net revenues decreased 40 basis points for the first three quarters of fiscal 2026.

Store operating expenses as a percentage of company-operated stores revenue increased 40 basis points, primarily due to labor investments largely in support of “Back to Starbucks” (approximately 220 basis points), and increased reserves for self- insured claims (approximately 60 basis points), offset by sales leverage (approximately 300 basis points).

Other operating expenses decreased $49 million, primarily due to savings from simplifying our licensed business support organization ($45 million).

Depreciation and amortization expenses as a percentage of total net revenues decreased 60 basis points, primarily as a result of ceasing depreciation upon classifying our Starbucks retail operations in China as held for sale.

General and administrative expenses decreased $41 million, largely due to restructuring-related savings ($111 million), partially offset by increases in performance-based compensation ($27 million) and transaction-related expenses related to the strategic partnership with Boyu Capital to operate Starbucks retail in China ($30 million).

Restructuring and impairments decreased $3 million, largely due to lapping costs associated with the simplification of our support organization in the prior year, partially offset by costs associated with the closure of coffeehouses in the current year.

See Note 17 , Restructuring, to the consolidated financial statements included in Item 1 of Part I of this 10-Q, for further discussion.

Income from equity investees increased $6 million, primarily due to income from our North American Coffee Partnership joint venture.

The combination of these changes resulted in an overall decrease in operating margin of 70 basis points for the first two quarters of fiscal 2026.

Depreciation and amortization expenses as a percentage of total net revenues decreased 60 basis points, primarily driven by ceasing depreciation upon classifying our Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 and converting Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.

General and administrative expenses decreased $120 million, largely due to restructuring-related savings ($174 million) and lapping of the Leadership Experience 2025 ($81 million) and the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($42 million).

This was partially offset by increases in performance-based compensation ($112 million) and transaction-related expenses related to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($74 million).

Restructuring and impairments increased $279 million, largely due to costs associated with the impairment of Starbucks Reserve and Roastery store locations, and partner severance costs.

See Note 17 , Restructuring and Impairments, to the consolidated financial statements included in Item 1 of Part I of this 10-Q, for further discussion.

Income from equity investees increased $27 million, primarily due to income from our China joint venture, which was formed upon the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.

The combination of these changes resulted in an overall decrease in operating margin of 20 basis points for the first three quarters of fiscal 2026.

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Other Income and Expenses

Quarter Ended Two Quarters Ended

Change Mar 29,

Quarter Ended Three Quarters Ended

Change Jun 28,

As a % of Total

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Operating income $ 980.4 $ 935.6 $ 44.8 10.5 % 9.9 % $ 2,699.3 $ 2,658.4 $ 40.9 9.4 % 9.6 %

Net gain resulting from divestiture of certain operations 536.3 — 536.3 5.8 — 536.3 0.0 536.3 1.9 0.0

Interest income and other, net 37.2 25.6 11.6 0.4 0.3 87.3 81.8 5.5 0.3 0.3

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Effective tax rate including noncontrolling interests 26.4 % 31.8 % 36.5 % 26.5 %

For the quarter ended March 29, 2026, compared with the quarter ended March 30, 2025

Interest income and other, net increased $9 million, primarily due to favorable investment performance.

Interest expense increased $10 million, primarily due to higher interest rates on refinanced long-term debt in the current year and reduced savings from cross-currency interest rate hedging.

The effective tax rate for the quarter ended March 29, 2026, was 29.8% compared to 23.5% for the same period in fiscal 2025.

The increase was primarily due to the impact of reorganizing certain entities in China (approximately 280 basis points), the $8 million discrete increase to the change in indefinite reinvestment assertions as a result of classifying the Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 (approximately 110 basis points), and the effect of higher pre-tax earnings and the proportionate impacts from certain permanent differences and discrete items.

For the two quarters ended March 29, 2026, compared with the two quarters ended March 30, 2025

Interest income and other, net decreased $6 million, primarily due to non-core investment impairments.

Interest expense increased $22 million, primarily due to higher interest rates on refinanced long-term debt in the current year and reduced savings from cross-currency interest rate hedging.

The effective tax rate for the two quarters ended March 29, 2026, was 46.1% compared to 23.6% for the same period in fiscal 2025.

The increase was primarily due to the $273 million discrete impact of changes in indefinite reinvestment assertions as a result of classifying Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 (approximately 1,830 basis points), lapping the discrete impact of a tax status change for a certain foreign entity in the first quarter of fiscal 2025 (approximately 200 basis points), and the impact of reorganizing certain entities in China (approximately 130 basis points).

For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025

Net gain resulting from divestiture of certain operations was $536.3 million, due to the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026.

Interest income and other, net increased $12 million, primarily due to higher cash balances and interest rates in the current year, partially offset by non-core investment impairments.

Interest expense decreased $8 million, primarily due to reduced debt balances in the current year.

The effective tax rate for the quarter ended June 28, 2026, was 26.4% compared to 31.8% for the same period in fiscal 2025.

The decrease was primarily due to lapping the discrete impact of changes in indefinite reinvestment assertions for certain foreign entities in the third quarter of fiscal 2025 (approximately 850 basis points), partially offset by impacts resulting from the divestiture of Starbucks retail operations in China in the third quarter of fiscal 2026 (370 basis points).

For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025

Net gain resulting from divestiture of certain operations was $536.3 million, due to the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026.

Interest income and other, net increased $6 million, primarily due to higher cash balances and interest rates in the current year.

Interest expense increased $14 million, primarily due to reduced savings from cross-currency interest rate hedging, partially offset by reduced debt balances in the current year.

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The effective tax rate for the three quarters ended June 28, 2026, was 36.5% compared to 26.5% for the same period in fiscal 2025.

The increase was primarily due to the $273 million discrete impact of changes in indefinite reinvestment assertions as a result of classifying Starbucks retail operations in China as held for sale in the first quarter of fiscal 2026 (approximately 640 basis points), impacts resulting from the divestiture of Starbucks retail operations in China during the third quarter of fiscal 2026 (approximately 240 basis points) and lapping the discrete impact of a tax status change for a certain foreign entity in the first quarter of fiscal 2025 (approximately 130 basis points).

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Segment Information

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North America

Quarter Ended Two Quarters Ended

Change Mar 29,

Quarter Ended Three Quarters Ended

Change Jun 28,

As a % of North America

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56.1 % 56.5 % 57.3 % 56.4 %

For the quarter ended March 29, 2026, compared with the quarter ended March 30, 2025

North America total net revenues for the second quarter of fiscal 2026 increased $421 million, or 7%, primarily driven by an increase in company-operated stores revenue due to a 7.1% increase in comparable store sales ($396 million), driven by a 4.4% increase in comparable transactions and a 2.6% increase in average ticket, primarily due to higher delivery sales.

For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025

North America total net revenues for the third quarter of fiscal 2026 increased $468 million, or 7%, primarily driven by an increase in company-operated stores revenue due to a 8.1% increase in comparable store sales ($486 million), driven by a 4.5% increase in comparable transactions and a 3.5% increase in average ticket, primarily due to higher delivery sales and strength in customer food attach and beverage modifications.

Operating Margin

North America operating income for the second quarter of fiscal 2026 decreased 9% to $680 million, compared to $748 million in the second quarter of fiscal 2025.

Operating margin contracted 170 basis points to 10%, primarily driven by labor investments largely in support of “Back to Starbucks,” (approximately 260 basis points), product mix shift (90 basis points) and inflationary pressures (approximately 90 basis points), primarily driven by tariffs and elevated coffee pricing, partially offset by sales leverage (370 basis points).

For the two quarters ended March 29, 2026, compared with the two quarters ended March 30, 2025

North America total net revenues for the first two quarters of fiscal 2026 increased $630 million, or 5%, primarily driven by an increase in company-operated stores revenue due to a 5.3% increase in comparable store sales ($618 million), driven by a 3.6% increase in comparable transactions and a 1.6% increase in average ticket, primarily due to higher delivery sales, and an increase in customer beverage modifications.

North America operating income for the third quarter of fiscal 2026 increased 10% to $1.0 billion, compared to $919 million in the third quarter of fiscal 2025.

Operating margin expanded 30 basis points to 13.6%, primarily driven by sales leverage (approximately 340 basis points), lapping of the Leadership Experience 2025 (approximately 120 basis points), and lower inflation paired with tariff refunds (approximately 110 basis points).

This was partially offset by higher restructuring costs (approximately 240 basis points), labor investments largely in support of “Back to Starbucks” (approximately 190 basis points) and product mix shift (approximately 100 basis points).

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For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025

North America total net revenues for the first three quarters of fiscal 2026 increased $1.1 billion, or 5%, primarily driven by an increase in company-operated stores revenue due to a 6.2% increase in comparable store sales ($1.1 billion), driven by a 3.9% increase in comparable transactions and a 2.3% increase in average ticket, primarily due to higher delivery sales, and strength in customer beverage modifications and food attach.

Operating Margin

North America operating income for the first two quarters of fiscal 2026 decreased 20% to $1.5 billion, compared to $1.9 billion in the first two quarters of fiscal 2025.

Operating margin contracted 330 basis points to 11%, primarily driven by labor investments largely in support of “Back to Starbucks” (approximately 260 basis points), inflationary pressures (approximately 120 basis points), primarily driven by tariffs and elevated coffee pricing, and product mix shift (40 basis points), partially offset by sales leverage (180 basis points).

North America operating income for the first three quarters of fiscal 2026 decreased 10% to $2.6 billion, compared to $2.8 billion in the first three quarters of fiscal 2025.

Operating margin contracted 210 basis points to 11.8%, primarily driven by labor investments largely in support of “Back to Starbucks” (approximately 240 basis points).

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International

Quarter Ended Two Quarters Ended

Quarter Ended Three Quarters Ended

As a % of International

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Store operating expenses as a % of company-operated stores revenue 54.3 % 51.9 % 49.3 % 52.2 %

For the quarter ended March 29, 2026, compared with the quarter ended March 30, 2025

International total net revenues for the second quarter of fiscal 2026 increased $184 million, or 10%, primarily driven by higher product sales to, and royalty revenues from, our licensees ($74 million), primarily due to the opening of 321 net-new licensed stores over the past 12 months.

Additional contributing factors were favorable foreign currency translation impacts ($40 million), an increase in company-operated stores revenue due to a 2.6% increase in comparable store sales ($37 million), driven by a 2.1% increase in comparable transactions and a 0.5% increase in average ticket, and net-new company-operated store growth of 3%, or 261 stores, over the past 12 months ($35 million).

For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025

International total net revenues for the third quarter of fiscal 2026 decreased $688 million, or 34%, primarily driven by lower company-operated store revenues following the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($780 million).

This decrease was partially offset by higher product sales to, and royalty revenues from, our newly-formed China joint venture ($53 million) and other licensees ($50 million).

Operating Margin

International operating income for the second quarter of fiscal 2026 increased 84% to $399 million, compared to $217 million in the second quarter of fiscal 2025.

Operating margin expanded 780 basis points to 19%, primarily due to lower store operating and depreciation and amortization costs after classifying assets for Starbucks retail operations in China as held for sale (approximately 520 basis points), and sales leverage (430 basis points), partially offset by inflationary pressures (approximately 120 basis points), primarily driven by elevated coffee pricing.

For the two quarters ended March 29, 2026, compared with the two quarters ended March 30, 2025

International total net revenues for the first two quarters of fiscal 2026 increased $378 million, or 10%, primarily driven by higher product sales to, and royalty revenues from, our licensees ($132 million), primarily due to the opening of 321 net-new licensed stores over the past 12 months.

Also contributing was an increase in company-operated stores revenue due to a 3.9% increase in comparable store sales ($108 million), driven by a 2.5% increase in comparable transactions and a 1.4% increase in average ticket, as well as net-new company-operated store growth of 3%, or 261 stores, over the past 12 months ($85 million), and favorable foreign currency translation impacts ($51 million).

International operating income for the third quarter of fiscal 2026 decreased 7% to $253 million, compared to $273 million in the third quarter of fiscal 2025.

Operating margin expanded 550 basis points to 19.1%, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 (approximately 800 basis points).

This was partially offset by higher restructuring costs (approximately 290 basis points).

Table of Conten t s

For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025

International total net revenues for the first three quarters of fiscal 2026 decreased $311 million, or 5%, primarily driven by lower company-operated store revenues following the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($730 million).

This decline was partially offset by higher product sales to, and royalty revenues from, existing licensees ($182 million) and our newly-formed China joint venture ($53 million) and an increase in company-operated stores revenue due to a 4.3% increase in comparable store sales ($146 million), driven by a 2.5% increase in comparable transactions and a 1.7% increase in average ticket.

Operating Margin

International operating income for the first two quarters of fiscal 2026 increased 50% to $681 million, compared to $454 million in the first two quarters of fiscal 2025.

Operating margin expanded 450 basis points to 17%, primarily due to sales leverage (420 basis points) and lower store operating and depreciation and amortization costs after classifying assets for Starbucks retail operations in China as held for sale (approximately 340 basis points), partially offset by inflationary pressures (approximately 160 basis points), primarily driven by elevated coffee pricing, and restructuring costs associated with the closure of coffeehouses (approximately 90 basis points).

International operating income for the first three quarters of fiscal 2026 increased 29% to $934 million, compared to $727 million in the first three quarters of fiscal 2025.

Operating margin expanded 460 basis points to 17.2%, primarily due to the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 (approximately 350 basis points) and lower store operating and depreciation and amortization costs after classifying assets for Starbucks retail operations in China as held for sale in the first and second quarters of fiscal 2026 (approximately 280 basis points), partially offset by higher restructuring costs (approximately 140 basis points).

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Channel Development

Quarter Ended Two Quarters Ended

Change Mar 29,

Quarter Ended Three Quarters Ended

Change Jun 28,

As a % of Channel Development

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Operating income $ 306.2 $ 218.4 $ 87.8 52.1 % 45.1 % $ 751.9 $ 619.8 $ 132.1 44.8 % 46.6 %

For the quarter ended March 29, 2026, compared with the quarter ended March 30, 2025

Channel Development total net revenues for the second quarter of fiscal 2026 increased $159 million, or 39%, primarily due to an increase in revenue in the Global Coffee Alliance ($149 million).

For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025

Channel Development total net revenues for the third quarter of fiscal 2026 increased $104 million, or 22%, primarily due to an increase in revenue in the Global Coffee Alliance ($89 million).

Operating Margin

Channel Development operating income for the second quarter of fiscal 2026 increased 19% to $230 million, compared to $194 million in the second quarter of fiscal 2025.

Operating margin contracted 680 basis points to 41%, primarily driven by lower income from the North American Coffee Partnership joint venture relative to segment revenue growth (approximately 550 basis points) and other product mix shifts (160 basis points).

For the two quarters ended March 29, 2026, compared with the two quarters ended March 30, 2025

Channel Development total net revenues for the first two quarters of fiscal 2026 increased $245 million, or 29%, primarily due to an increase in revenue in the Global Coffee Alliance ($222 million).

Channel Development operating income for the third quarter of fiscal 2026 increased 40% to $306 million, compared to $218 million in the third quarter of fiscal 2025.

Operating margin expanded 700 basis points to 52.1%, primarily driven by tariff impacts including refunds (approximately 1,370 basis points).

This was partially offset by product mix shifts (approximately 470 basis points) and lower income from the North American Coffee Partnership joint venture relative to segment revenue growth (approximately 260 basis points).

For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025

Channel Development total net revenues for the first three quarters of fiscal 2026 increased $349 million, or 26%, primarily due to an increase in revenue in the Global Coffee Alliance ($311 million).

Operating Margin

Channel Development operating income for the first two quarters of fiscal 2026 increased 11% to $446 million, compared to $402 million in the first two quarters of fiscal 2025.

Operating margin contracted 660 basis points to 41%, primarily driven by product mix shifts (approximately 470 basis points) and lower North American Coffee Partnership joint venture income growth relative to segment revenue growth (230 basis points).

Channel Development operating income for the first three quarters of fiscal 2026 increased 21% to $752 million, compared to $620 million in the first three quarters of fiscal 2025.

Operating margin contracted 180 basis points to 44.8%, primarily driven by lower North American Coffee Partnership joint venture income growth relative to segment revenue growth (approximately 240 basis points).

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Corporate and Other

Quarter Ended Two Quarters Ended

Quarter Ended Three Quarters Ended

Net revenues:

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Product and distribution costs 22.4 37.4 (15.0) (40.1) 79.3 69.7 9.6 13.8

Other operating expenses 1.2 — 1.2 nm 2.1 0.2 1.9 950.0

Other operating expenses 1.6 0.6 1.0 166.7 3.7 0.7 3.0 428.6

Depreciation and amortization expenses 30.2 32.7 (2.5) (7.6) 93.4 92.9 0.5 0.5

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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 March 29, 2026, compared with the quarter ended March 30, 2025

Corporate and Other operating loss decreased 14% to $480 million for the second quarter of fiscal 2026 compared to $558 million for the second quarter of fiscal 2025, primarily due to lower costs associated with restructuring our support organization ($66 million), primarily severance costs, in support of our “Back to Starbucks” strategy.

For the two quarters ended March 29, 2026, compared with the two quarters ended March 30, 2025

Corporate and Other operating loss decreased 10% to $955 million for the first two quarters of fiscal 2026 compared to $1.1 billion for the first two quarters of fiscal 2025, primarily due to restructuring-related savings in the current year ($111 million) and lower costs associated with restructuring our support organization ($62 million), primarily severance costs, in support of our “Back to Starbucks” strategy, partially offset by transaction-related expenses for the strategic partnership with Boyu Capital to operate Starbucks retail in China ($24 million) and increases in performance-based compensation ($20 million).

For the quarter ended June 28, 2026, compared with the quarter ended June 29, 2025

Corporate and Other operating loss increased 24% to $588 million for the third quarter of fiscal 2026 compared to $474 million for the third quarter of fiscal 2025, primarily due to higher restructuring costs in support of our “Back to Starbucks” strategy ($73 million), performance-based compensation ($58 million) and transaction-related expenses for the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($44 million).

The increases are partially offset by restructuring-related savings ($53 million).

For the three quarters ended June 28, 2026, compared with the three quarters ended June 29, 2025

Corporate and Other operating loss increased $6 million during the first three quarters of fiscal 2026 compared to the first three quarters of fiscal 2025, primarily due to performance-based compensation ($78 million), transaction-related expenses for the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026 ($68 million) and higher restructuring costs in support of our “Back to Starbucks” strategy ($11 million).

The increases are offset by restructuring-related savings ($164 million).

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Quarterly Store Data

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Net stores opened/(closed) and transferred during the period (1)

Quarter Ended Two Quarters Ended Stores open as of

Quarter Ended Three Quarters Ended Stores open as of

North America

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Total Company 175 308 314 898 41,304 41,097

(1) Includes 62 and 227 stores closed in the quarter and two quarters ended March 29, 2026, respectively, as part of our “Back to Starbucks” restructuring plan.

(1) Includes 20 and 247 stores closed in the quarter and three quarters ended June 28, 2026, respectively, as part of our “Back to Starbucks” fourth quarter of fiscal 2025 restructuring plan.

(2) 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.

(3) Includes the conversion of 7,991 company-operated stores to licensed stores following the the conversion of Starbucks retail operations in China to our licensed joint venture model in the third quarter of fiscal 2026.

Financial Condition, Liquidity, and Capital Resources

Cash and Investment Overview

Our cash and investments were $2.0 billion as of March 29, 2026, and $3.7 billion as of September 28, 2025.

Our cash and investments were $3.9 billion as of June 28, 2026, and $3.7 billion as of September 28, 2025.

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.

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government treasury securities.

As of March 29, 2026, approximately $0.8 billion of cash and short-term investments were held in foreign subsidiaries, excluding cash balances for Starbucks retail operations in China that were classified as held for sale.

As of June 28, 2026, approximately $1.1 billion of cash and short-term investments were held in foreign subsidiaries.

Borrowing Capacity

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The 2025 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 March 29, 2026, we were in compliance with all applicable covenants.

No amounts were outstanding under our 2025 credit facility as of March 29, 2026, or September 28, 2025.

As of June 28, 2026, we were in

Table of Conten t s

compliance with all applicable covenants.

No amounts were outstanding under our 2025 credit facility as of June 28, 2026, or September 28, 2025.

Commercial Paper

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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 March 29, 2026 and September 28, 2025.

Our total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of our second quarter of fiscal 2026.

We had no borrowings outstanding under our commercial paper program as of June 28, 2026 and September 28, 2025.

Our total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of our third quarter of fiscal 2026.

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 March 29, 2026, and September 28, 2025, we had no borrowings outstanding under these credit facilities.

As of June 28, 2026, and September 28, 2025, 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.

Long-term Debt

In May 2026, the Company completed cash tender offers for certain series of its senior notes and repurchased approximately $1.3 billion aggregate principal amount of such notes using cash proceeds from the divestiture of Starbucks retail operations in China.

The notes repurchased consisted of:

• $273.5 million of the $750.0 million, 4.500% Senior Notes (the “May 2028 notes”)

• $321.8 million of the $500.0 million, 4.800% Senior Notes (the “May 2030 notes”)

• $110.4 million of the $500.0 million, 5.000% Senior Notes (the “February 2034 notes”)

• $410.2 million of the $500.0 million, 5.400% Senior Notes (the “May 2035 notes”)

• $200.0 million of the $1.0 billion, 4.500% Senior Notes (the “November 2048 notes”)

In connection with the redemptions, the Company recognized an immaterial gain on partial extinguishment of debt for the quarter ended June 28, 2026, which is included in Interest income and other, net in the consolidated statement of earnings.

In determining the value of the gain, the Company expensed the proportional amount of the related unamortized discount, premium, and debt issuance costs attributable to the repurchased notes.

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 March 29, 2026, we were in compliance with all applicable covenants.

As of June 28, 2026, 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.

Furthermore, we may use our available cash resources to make proportionate capital contributions to our investees.

We may also seek strategic acquisitions to leverage existing capabilities and further build our business.

We may also seek strategic acquisitions to leverage existing capabilities and

Table of Conten t s

further build our business.

Acquisitions may include increasing our ownership interests in our investees.

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We believe that net future cash flows generated from operations and existing cash and investments both domestically and internationally, combined with our ability to leverage our balance sheet through the issuance of debt, will be sufficient to finance capital requirements for our core businesses as well as shareholder distributions for at least the next 12 months.

Aside from the proceeds from our divestiture of Starbucks retail operations in China, we are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months.

We currently plan to use the proceeds from our divestiture for Starbucks retail operations in China for debt reduction, strengthening our balance sheet and allowing us to execute our long-term growth strategy with greater financial flexibility.

We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months.

In the third quarter of fiscal 2026 we used a portion of the proceeds from our divestiture of Starbucks retail operations in China for debt reduction, strengthening our balance sheet and allowing us to execute our long-term growth strategy with greater financial flexibility.

We have borrowed funds and continue to believe we have the ability to do so at reasonable interest rates;

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In the first quarter of fiscal 2026, we released all of our remaining indefinite reinvestment assertions and recorded a discrete tax expense of $266 million, which was subsequently increased in the second quarter of fiscal 2026 by $8 million.

In the third quarter of fiscal 2026, we recorded incremental income tax expense of $147.8 million, as a component of the estimated annual effective tax rate, in connection with our divestiture of Starbucks retail operations in China in the third quarter of fiscal 2026 and the retained equity interest in the joint venture.

In future periods, any foreign earnings may be repatriated at management’s discretion without any material, incremental tax consequences.

On February 20, 2026, the U.S.

Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act ( IEEPA) were unlawful.

Supreme Court ruled that reciprocal tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful.

Starbucks imports were previously subject to such tariffs under IEEPA.

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Customs and Border Protection launched a platform for importers of record to begin submitting IEEPA tariff refund requests.

As the timing and amount of any recovery are uncertain, we are unable to estimate the financial effects, if any, at this time.

We will continue to evaluate new information and will recognize the refund when the right to receive any amounts becomes probable and estimable.

During the second quarter of fiscal 2026, our Board of Directors approved a quarterly cash dividend to shareholders of $0.62 per share to be paid on May 29, 2026, to shareholders of record as of the close of business on May 15, 2026.

During the two quarters ended March 29, 2026, we made no common stock share repurchases.

As of March 29, 2026, 29.8 million shares of common stock remained available for repurchase under current authorizations.

Other than normal operating expenses, cash requirements for the remainder of fiscal 2026 are expected to consist primarily of repayments of long-term debt, as well as capital expenditures for investments in our new and existing stores, our supply chain, and corporate facilities.

Total capital expenditures for fiscal 2026 are expected to be moderately lower than fiscal 2025.

Starbucks submitted refund requests in the third quarter of fiscal 2026 for qualifying tariffs paid and has received substantially all of the refunds requested, which were recorded in product and distribution costs within the consolidated statements of earnings.

The refunds received during the third quarter of fiscal 2026 largely offset related tariffs incurred in the first three quarters of fiscal 2026.

During the third quarter of fiscal 2026, our Board of Directors approved a quarterly cash dividend to shareholders of $0.62 per share to be paid on August 28, 2026, to shareholders of record as of the close of business on August 14, 2026.

During the three quarters ended June 28, 2026, we made no common stock share repurchases.

As of June 28, 2026, 29.8 million shares of common stock remained available for repurchase under current authorizations.

Other than normal operating expenses, cash requirements for the remainder of fiscal 2026 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our supply chain, and corporate facilities.

Total capital expenditures for fiscal 2026 are expected to be lower than fiscal 2025.

In the MD&A included in the 10-K, we disclosed that we had $36.5 billion of current and long-term material cash requirements as of September 28, 2025.

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.

Cash provided by operating activities was $2.0 billion for the first two quarters of fiscal 2026, compared to $2.4 billion for the same period in fiscal 2025.

The change was primarily due to a decrease in cash flow of $380.8 million in Accounts Payable, which was primarily driven by payment timing, and a decrease in net earnings of $361.1 million.

These impacts were partially offset by a net increase in cash flow of $375.4 million in deferred income taxes primarily related to the change in indefinite reinvestment assertion as a result of classifying our Starbucks retail operations in China as held for sale.

Cash used in investing activities totaled $653.3 million for the first two quarters of fiscal 2026, compared to $1.5 billion for the same period in fiscal 2025.

The change was primarily due to a net decrease in capital expenditures of $685.7 million, driven by a reduction in new store investments and retail renovations in North America and global non-retail facilities spend, and lapping the acquisition of 23.5 Degrees Topco Limited in the first quarter of fiscal 2025.

Cash used in financing activities for the first two quarters of fiscal 2026 totaled $2.4 billion, compared to $1.4 billion for the same period in fiscal 2025.

The change was primarily due to a $1.0 billion repayment of long-term debt in the current year.

Aside from the impacts of our debt repayments and the divestiture of our retail operations in China, 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.

See Note 8, Debt, and N ote 2 , Acquisitions and Divestitures, in the consolidated financial statements included in Item 1 of Part I of this 10-Q for further discussions.

Cash provided by operating activities was $3.6 billion for the first three quarters of fiscal 2026, compared to $3.4 billion for the same period in fiscal 2025.

The increase of $238.4 million was primarily due to higher net earnings of $125.5 million and favorable changes in working capital.

Cash provided by investing activities totaled $1.6 billion for the first three quarters of fiscal 2026, compared to cash used of $2.1 billion for the same period in fiscal 2025.

The $3.7 billion favorable change was primarily due to net proceeds of $2.5 billion from the divestiture of Starbucks retail operations in China in the third quarter of fiscal 2026, combined with the $1.0 billion in lower capital expenditures, driven by lower new store investments and retail renovations in North America and China.

Cash used in financing activities for the first three quarters of fiscal 2026 totaled $4.9 billion, compared to $0.4 billion for the same period in fiscal 2025.

The $4.6 billion increase in cash used was primarily due to $2.8 billion in long-term debt

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repayments funded in part by proceeds from the divestiture of Starbucks retail operations in China, combined with the absence of new debt issuances in fiscal 2026 compared to the $1.7 billion raised in fiscal 2025.

Commodity Prices, Availability and General Risk Conditions

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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