STARBUCKS CORP

Starbucks is the premier roaster, marketer, and retailer of specialty coffee in the world, operating in 89 markets. The company purchases and roasts high-quality coffees that it sells, along with handcrafted coffee, tea, and other beverages and a variety of high-quality food items through company-operated stores. It also sells a variety of coffee and tea products and licenses its trademarks through other channels, such as licensed stores as well as grocery and foodservice through its Global Coffee Alliance with Nestlé S.A. The company's primary objective is to maintain Starbucks' standing as one of the most recognized and respected brands in the world, with continuous investments in its brand and operations expected to deliver long-term targeted revenue and income growth.

Starbucks' primary competitors for coffee beverage sales are specialty coffee retailers and shops, with competition based on product quality, brand reputation, service, convenience, and price. The company experiences direct competition from large competitors in the quick-service restaurant sector and the ready-to-drink coffee beverage market, in addition to both well-established and start-up companies in many international markets. Starbucks also competes with restaurants and other specialty retailers for prime retail locations and qualified personnel. Its coffee and tea products sold through the Channel Development segment compete directly against specialty coffees and teas sold through grocery stores, warehouse clubs, specialty retailers, convenience stores, and foodservice accounts and also compete indirectly against all other coffees and teas on the market.

Starbucks generates the majority of its revenues through company-operated stores and licensed stores. Revenue from company-operated stores accounted for 83% of total net revenues during fiscal 2025, while revenues from licensed stores accounted for 12% of total net revenues. The company's retail objective is to be the leading retailer and brand of coffee and tea in each of its target markets by selling the finest quality coffee, tea, and related products, as well as complementary food offerings, and by providing each customer with a unique Starbucks Experience built upon superior customer service through the Green Apron Service Model, convenience, and a seamless digital experience. The company also operates a branded stored value card program designed to provide customers with a convenient payment method, support gifting, and increase the frequency of store visits by cardholders, in part through the related Starbucks Rewards loyalty program.

Starbucks has three reportable operating segments: North America, International, and Channel Development. The North America segment, which is inclusive of the U.S. and Canada, accounted for 74% of total net revenues for fiscal 2025 and is the company's most mature business having achieved significant scale. The International segment, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America, and the Caribbean, accounted for 21% of total net revenues. The Channel Development segment accounted for 5% of total net revenues and includes roasted whole bean and ground coffees, Starbucks-branded single-serve products, a variety of ready-to-drink beverages such as Frappuccino and Starbucks Doubleshot, foodservice products, and other branded products sold worldwide outside of company-operated and licensed stores. A large portion of the Channel Development business operates under a licensed model of the Global Coffee Alliance with Nestlé, while global ready-to-drink businesses operate under collaborative relationships with PepsiCo, Inc., Nestlé, and others.

As of September 28, 2025, Starbucks had a total of 40,990 stores globally, consisting of 21,514 company-operated stores and 19,476 licensed stores. In North America, there were 11,018 company-operated stores and 7,293 licensed stores, totaling 18,311 stores. In International markets, there were 10,496 company-operated stores and 12,183 licensed stores, totaling 22,679 stores. The retail sales mix by product type for company-operated stores in fiscal 2025 was 73% beverages, 23% food, and 4% other, which primarily consists of serveware, packaged and single-serve coffees and teas, and ready-to-drink beverages. The company also sells goods and services under the Teavana, Ethos, and Starbucks Reserve brands.

In the fourth quarter of fiscal 2024, Starbucks announced its 'Back to Starbucks' strategy, implemented with the goal to bring new and existing customers to its stores and business and return to growth. In the fourth quarter of fiscal 2025, the company announced a restructuring plan involving the closure of coffeehouses and the further transformation of its support organization as part of this strategy. The company assessed its existing store portfolio and closed, or plans to close, coffeehouses that did not have a viable path to offering the physical environment consistent with the brand and a clear path to financial performance. During fiscal 2025, the company opened 1,261 company-operated stores and closed 877, including 627 stores closed in the fourth quarter of fiscal 2025 as part of the restructuring plan. The company also acquired 23.5 Degrees Topco Limited in the first quarter of fiscal 2025, converting 113 licensed stores to company-operated stores. As of September 28, 2025, Starbucks employed approximately 381,000 people worldwide, with approximately 223,000 in the U.S. and approximately 158,000 outside of the U.S.

For fiscal 2025, total net revenues were $37.6 billion, compared to $36.5 billion in fiscal 2024. Net income was $4.3 billion, compared to $4.6 billion in the prior year. Diluted earnings per share was $3.76, compared to $3.99 in fiscal 2024. Operating income was $6.0 billion, compared to $6.5 billion in the prior year. The company generated cash from operations of $6.6 billion and free cash flow of $4.0 billion.

A key growth vector is the expansion of the global store base, adding stores in both existing developed markets such as the U.S. and in higher growth markets, as well as optimizing the mix of company-operated and licensed stores around the world. The company's strategy for expanding its global retail business is to increase its category share in a disciplined manner by selectively opening additional stores in new and existing markets, as well as increasing sales in existing stores. Store growth in specific existing markets will vary due to many factors, including expected financial returns, the maturity of the market, economic conditions, consumer behavior, and the local business environment.

Another growth vector is the continued drive of beverage, equipment, process, and technology innovation, including in the company's industry-leading digital platform. The company strives to regularly offer consumers new, innovative coffee and other products in a variety of forms, across new categories and diverse channels. The 'Back to Starbucks' strategy includes strengthening the brand through product development, marketing, in-store and digital experience. The company also leverages experiences gained through its stores and elsewhere to drive innovation.

The filing does not contain specific margin trajectory or efficiency targets with exact figures.

The filing does not contain specific operational outlook details regarding supply chain posture, manufacturing capacity, technology infrastructure investments, or headcount strategy.

The filing does not contain specific figures for R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy.

The filing identifies several structural headwinds and execution risks. The price of coffee is subject to volatility and has steadily increased over the past five years with significant increases over the last two years. Supply and price can be affected by multiple factors in producing countries, including weather and extreme weather events, water supply quality and availability, natural disasters, crop disease and pests, general increases in farm inputs and costs of production, inventory levels, and political and economic conditions. Climate change may further exacerbate many of these factors. Price is also impacted by geopolitical conditions, including new and existing tariffs on coffee imports and other trade controls, and by trading activities in the arabica coffee futures market.

The filing identifies additional constraints including unfavorable macroeconomic conditions such as economic slowdowns or recessions, rising real estate costs, supply chain disruptions, climate change and extreme weather events, inflation and interest rate fluctuations, government shutdowns, labor unrest, geopolitical instability, disruptions in credit markets, and foreign currency exchange rate volatility. The company also faces risks related to evolving consumer preferences, reduction in discretionary spending, and the potential impact of union organizing efforts in approximately 6% of Starbucks U.S. company-operated stores that are represented by unions.

The company faces material risk from coffee price volatility, as the price of coffee has steadily increased over the past five years with significant increases over the last two years, and supply and price can be affected by weather, natural disasters, crop disease, and political and economic conditions in producing countries. The company also faces risk from unfavorable macroeconomic conditions, including economic slowdowns or recessions, rising real estate costs, supply chain disruptions, inflation and interest rate fluctuations, and geopolitical instability. Additionally, the company faces risk from evolving consumer preferences and reduction in discretionary spending, as well as the potential impact of union organizing efforts in approximately 6% of Starbucks U.S. company-operated stores that are represented by unions. The company also faces risk from the potential negative effects of food or beverage-safety incidents or product recalls.

Management's message emphasizes the 'Back to Starbucks' strategy, which was implemented with the goal to bring new and existing customers to the company's stores and business and return to growth. The strategy includes supporting green apron partners, enhancing the customer experience, reestablishing the company as the community coffeehouse, and strengthening the brand through product development, marketing, in-store and digital experience. In the fourth quarter of fiscal 2025, the company announced a restructuring plan involving the closure of coffeehouses and the further transformation of its support organization as part of this strategy. The company assessed its existing store portfolio and closed, or plans to close, coffeehouses that did not have a viable path to offering the physical environment consistent with the brand and a clear path to financial performance. Management believes the continuous investments in the brand and operations will deliver long-term targeted revenue and income growth.