Starbucks (SBUX.US) Surges After-Hours! Q3 Performance Mixed, But Reforms Show Initial Effectiveness; China Market Same-Store Sales Return to Growth

According to an exclusive report by Zhongtong Finance APP, after Starbucks (SBUX.US) emphasized the progress of its turnaround plans under CEO Brian Niccol, the company's stock price surged after-hours. Although the company's same-store sales and profits for the third quarter of 2025 did not meet market expectations, investors are focused on positive signals in the earnings report, including the first-ever growth in China market same-store sales since late 2023. In a prepared statement, Niccol said that the transformation plan "exceeded expectations" and promised to launch an innovation wave in 2026.

Niccol noted that while financial performance has not yet fully reflected the reform results, the momentum is ahead of schedule. He referred to his experience in successfully addressing food safety crises at Chipotle and said that the company's current trajectory is strengthening. This news affected Starbucks' stock price, which rose by over 4% after-hours.

The earnings report showed that Starbucks' Q3 revenue increased 3.8% year-over-year to $94.56 billion, exceeding market expectations of $93.1 billion; adjusted EPS was $0.50, down 46% year-over-year and below market expectations of $0.65. Same-store sales for Q3 decreased 2%, missing market expectations of a 1.5% decline. In the US market, same-store sales decreased 2%, while China market same-store sales increased 2% for the first time in 18 months, exceeding market expectations of 1.44% growth.

As Starbucks is currently undergoing a comprehensive reform phase, it has experienced rare consecutive same-store sales declines over the past year and a half. Since taking office last September, Niccol plans to revitalize US market business by shortening wait times, updating menus, remodeling stores, and prioritizing drive-through orders.

Although analysts and investors generally recognize these reform plans, they still lack more details about the timeline and costs. On Tuesday, Niccol stated that Starbucks has reduced store construction costs by 30%. Additionally, a new plan involving increased employee numbers, improved customer service, and prioritizing drive-through orders has brought about "faster service, stronger sales, and better customer experiences."

However, these developments have not yet fully reflected in overall financial data. Starbucks' Q3 same-store sales decreased by 2%, marking the sixth consecutive quarter of decline. In the US market, same-store sales decreased by 2% primarily due to reduced transaction frequencies. Niccol noted that "employee participation is rising, customer connection ratings are up, completion rates are setting new highs, and non-Starbucks loyalty program transactions are recovering growth" in the US.

In China, Starbucks' second-largest market, the company has taken steps to address long-term sluggish sales by lowering prices for some tea-based beverages, increasing sugar-free options, and other measures. These efforts have shown initial effectiveness, with transaction numbers growing by 6% and same-store sales up by 2%.

This marks the first time in over a year that Starbucks has achieved same-store sales growth in China. According to previous reports, Starbucks had been considering selling part of its Chinese business stakes. Niccol stated during the earnings call that more than 20 institutions have expressed interest, and the company hopes to retain "substantial" stakes.

Starbucks noted that its operating profit margin decreased in Q3 primarily due to investments in transformation plans, such as increasing store employee numbers, hosting a store manager's conference in Las Vegas, and coping with inflation pressures.

Chief Financial Officer Cathy Smith stated that the company will add $5 billion in labor costs for US-owned stores over the next year. However, Smith also expressed caution about the remainder of the fiscal year due to changes brought by the transformation and uncertainty in consumer environments. She noted that "transaction volumes are improving, but it's unclear what level they will reach."