AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 3/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Brand ownership produces actual licensing and royalty activity across disclosed years, including retained China licensing and growth from existing international licensees. This supports a demonstrated intangible advantage, without proving dominance.
durability · 2/4 · Established licensing and active membership support persistence, but realized traffic weakness and unsuccessful investments prevent a strong durability assessment.
customer dependency · 1/4 · Large active membership supports engagement, but traffic declines demonstrate fragile demand. No substantial contractual or operational dependence is established.
erosion resilience · 2/4 · Recovering transactions and international licensee revenues demonstrate resilience after weakness. North American licensee declines and continuing cost pressure leave recovery incomplete.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · 2/4 · Fiscal 2025 ticket rose 1%, primarily from annualizing prior pricing, while transactions fell 2%. Fiscal 2026 ticket rose 2.3% alongside 3.6% transaction growth, but price and mix are not separated. Observed outcomes support mixed pricing power.
retention · 2/4 · 34.2 million active Rewards members, up 1%, and recovering comparable transactions indicate repeat engagement indirectly. Earlier traffic declines constrain the assessment; no cohort retention rate is supplied.
margin resilience · 1/4 · Operating income deteriorated sharply through fiscal 2025. Fiscal 2026 year-to-date margin declined despite comparable-sales recovery; quarterly improvement partly reflected China conversion and tariff refunds. Pricing has not demonstrated robust protection of profitability.
contractual freedom · — · Prior pricing establishes that prices changed, but the passages do not disclose retail price-setting rights or licensee repricing provisions. Possible limits on cost pass-through do not establish the governing contractual freedom.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 4.86
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 3.08
Financial strength—
Missing required inputs: netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 20.25
- interestCoverageGrade
- 40.11
- currentRatioGrade
- 0.00
- Debt / FCF (x)
- 6.58
- Interest coverage (x)
- 5.41
- Current ratio (x)
- 0.72
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -0.50
- 3-year average SBC / revenue (%)
- 0.85
- cashConversionGrade
- 96.85
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Fiscal 2026 operating cash flow of $3.604 billion covered $887.8 million of capital spending and $2.118 billion of dividends. Debt repayments totaled $2.816 billion alongside divestiture proceeds, with no repurchases. These actions support discipline, offset by prior investment underperformance and substantial restructuring costs; transaction value creation is not established.
incentive alignment · 2/4 · Multiyear performance equity and actual bonuses at 54.8% of target demonstrate some performance sensitivity. Individual factors and adjusted financial measures temper alignment. Turnaround grants were approved in June 2025, but their unfinished performance period establishes no achieved vesting or savings. Ownership amounts are missing.
execution · 2/4 · Comparable transaction recovery, international licensee growth and completion of the China transaction demonstrate progress. Execution is assessed indirectly from operating outcomes, balanced against earlier failed investments and continuing margin pressure; management causality is not fully separable.
governance · 2/4 · Independent committees, a lead independent director, annual majority-vote elections and an auditor opinion of effective financial controls support oversight. The combined chair/CEO role limits structural separation, and these disclosures do not establish exceptional oversight effectiveness.
Evidence
U.S. Starbucks Rewards Members (90-day active) 34.2M +1% year-over-year PATH FORWARD: “BACK TO STARBUCKS” We are focused on bringing customers back to our coffeehouses and returning to growth.
Company overview / fiscal 2025 active U.S. Starbucks Rewards membership · Filed 26/01/2026
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.
MD&A / first three quarters of fiscal 2026 comparable sales, transactions and ticket · Filed 29/07/2026
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.
MD&A / international existing-licensee and China joint-venture revenue · Filed 29/07/2026
38 Table of Contents 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.
MD&A / completed China transaction and retained brand licensing · Filed 29/07/2026
Also included in this line item is our proportionate share of gross profit resulting from coffee and other product sales to, and royalty and license fee revenues generated from, equity investees.
Note 6 / product sales, royalty and license fee income from equity investees · Filed 17/11/2023
Our performance was lower-than-expected as a result of a pronounced customer traffic decline, reflecting our targeted and accelerated investments not improving customer behaviors as intended, as well as the macroeconomic and competitive environment in China that further pressured our results.
MD&A / realized traffic weakness and investment underperformance · Filed 20/11/2024
Partially offsetting this increase was a 1% decline in comparable store sales ($408 million), attributable to a 2% decline in comparable transactions, partially offset by a 1% increase in average ticket, primarily due to annualization of prior year pricing.
MD&A / fiscal 2025 transaction decline and prior-year pricing contribution · Filed 14/11/2025
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).
MD&A / equipment sales and North American licensee revenue declines · Filed 29/07/2026
40 Table of Contents Operating Expenses Quarter Ended Three Quarters Ended Jun 28, 2026 Jun 29, 2025 $ Change Jun 28, 2026 Jun 29, 2025 Jun 28, 2026 Jun 29, 2025 $ Change Jun 28, 2026 Jun 29, 2025 As a % of Total Net Revenues As a % of Total Net Revenues Product and distribution costs $ 2,828.6 $ 2,955.5 $ (126.9) 30.3 % 31.3 % $ 9,310.7 $ 8,586.8 $ 723.9 32.4 % 31.1 % Store operating expenses 4,197.4 4,344.8 (147.4) 45.0 45.9 13,158.3 12,723.9 434.4 45.7 46.1 Other operating expenses 131.9 151.6 (19.7) 1.4 1.6 393.6 442.8 (49.2) 1.4 1.6 Depreciation and amortization expenses 361.6 427.6 (66.0) 3.9 4.5 1,125.8 1,254.0 (128.2) 3.9 4.5 General and administrative expenses 598.8 677.2 (78.4) 6.4 7.2 1,855.7 1,975.2 (119.5) 6.5 7.2 Restructuring and impairments 302.6 20.8 281.8 3.2 0.2 415.8 137.0 278.8 1.4 0.5 Total operating expenses 8,420.9 8,577.5 (156.6) 90.3 90.7 26,259.9 25,119.7 1,140.2 91.3 91.0 Income from equity investees 78.6 57.1 21.5 0.8 0.6 189.9 162.7 27.2 0.7 0.6 Operating income $ 980.4 $ 935.6 $ 44.8 10.5 % 9.9 % $ 2,699.3 $ 2,658.4 $ 40.9 9.4 % 9.6 % Store operating expenses as a % of company-operated stores revenue 55.9 % 55.6 % 56.0 % 55.6 % 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).
MD&A / operating expenses, margins and China conversion effects · Filed 29/07/2026
We supply strategic products, including coffee, to our licensees, and we may have limited ability to pass along increased costs.
Risk factors / potential limits on passing increased costs to licensees · Filed 14/11/2025
The specialty coffee market is highly competitive across product quality, innovation, service, convenience (e.g., delivery and mobile ordering), and price.
Competition / dimensions of specialty coffee competition · Filed 14/11/2025
(in millions) North America International Channel Development Corporate and Other Total Fiscal 2025 Total net revenues $ 27,373.1 $ 7,819.9 $ 1,871.7 $ 119.7 $ 37,184.4 Product and distribution costs 7,628.7 2,749.8 1,168.3 111.4 11,658.2 Store operating expenses 13,973.3 3,085.6 — — 17,058.9 Other operating expenses 281.6 242.0 60.2 0.8 584.6 Depreciation and amortization expenses 1,196.3 363.9 — 124.5 1,684.7 General and administrative expenses 483.3 344.3 5.8 1,783.8 2,617.2 Restructuring and impairments 653.2 82.5 1.9 154.4 892.0 Total operating expenses 24,216.4 6,868.1 1,236.2 2,174.9 34,495.6 Income from equity method investees — (1.8) 249.6 — 247.8 Operating income/(loss) $ 3,156.7 $ 950.0 $ 885.1 $ (2,055.2) $ 2,936.6 Interest income and other, net 113.3 Interest expense (542.6) Earnings before income taxes $ 2,507.3 79 Table of Contents (in millions) North America International Channel Development Corporate and Other Total Fiscal 2024 Total net revenues $ 27,009.5 $ 7,338.9 $ 1,769.8 $ 58.0 $ 36,176.2 Product and distribution costs 7,478.0 2,575.2 1,075.4 52.0 11,180.6 Store operating expenses 12,467.1 2,819.4 — — 15,286.5 Other operating expenses 280.9 225.1 58.4 1.2 565.6 Depreciation and amortization expenses 1,052.4 338.3 — 121.9 1,512.6 General and administrative expenses 375.8 338.8 7.7 1,801.0 2,523.3 Total operating expenses 21,654.2 6,296.8 1,141.5 1,976.1 31,068.6 Income from equity method investees — 3.6 297.6 — 301.2 Operating income/(loss) $ 5,355.3 $ 1,045.7 $ 925.9 $ (1,918.1) $ 5,408.8 Interest income and other, net 122.8 Interest expense (562.0) Earnings before income taxes $ 4,969.6 (in millions) North America International Channel Development Corporate and Other Total Fiscal 2023 Total net revenues $ 26,569.6 $ 7,487.6 $ 1,893.8 $ 24.6 $ 35,975.6 Product and distribution costs 7,530.4 2,608.4 1,250.1 20.2 11,409.1 Store operating expenses 11,959.2 2,761.1 — — 14,720.3 Other operating expenses 263.8 219.0 54.6 2.0 539.4 Depreciation and amortization expenses 910.1 335.1 0.1 117.3 1,362.6 General and administrative expenses 389.7 335.8 8.4 1,707.4 2,441.3 Restructuring and impairments 20.7 — — 1.1 21.8 Total operating expenses 21,073.9 6,259.4 1,313.2 1,848.0 30,494.5 Income from equity method investees — 2.7 295.7 — 298.4 Other segment items(1) — — 91.3 — 91.3 Operating income/(loss) $ 5,495.7 $ 1,230.9 $ 967.6 $ (1,823.4) $ 5,870.8 Interest income and other, net 81.2 Interest expense (550.1) Earnings before income taxes $ 5,401.9 (1) Includes gain from sale of assets.
Note 17 / fiscal 2023–2025 segment revenues, expenses and operating income · Filed 14/11/2025
5 Table of Contents STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions, unaudited) Three Quarters Ended Jun 28, 2026 Jun 29, 2025 OPERATING ACTIVITIES: Net earnings including noncontrolling interests $ 1,849.0 $ 1,723.5 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 1,210.8 1,315.5 Deferred income taxes, net 252.1 48.1 Income earned from equity method investees, net (187.8) (184.4) Distributions received from equity method investees 152.9 186.5 Net gain resulting from divestiture of certain operations (536.3) — Stock-based compensation 290.4 244.3 Non-cash lease costs 1,008.1 1,104.9 Loss on disposal, impairment, and accelerated amortization of assets 398.2 143.0 Other 6.3 11.4 Cash provided by/(used in) changes in operating assets and liabilities: Accounts receivable (134.2) (46.4) Inventories (144.8) (477.6) Income taxes payable 362.7 50.7 Accounts payable 144.4 291.1 Deferred revenue 51.2 (5.0) Operating lease liability (1,281.9) (1,144.0) Other operating assets and liabilities 163.0 104.1 Net cash provided by (used in) operating activities 3,604.1 3,365.7 INVESTING ACTIVITIES: Purchases of investments (133.6) (298.2) Sales of investments 22.3 1.1 Maturities and calls of investments 141.7 276.9 Additions to property, plant and equipment (887.8) (1,849.5) Acquisitions, net of cash acquired — (177.1) Net proceeds from the divestiture of certain operations 2,544.2 — Other (116.4) (48.1) Net cash provided by (used in) investing activities 1,570.4 (2,094.9) FINANCING ACTIVITIES: Net proceeds from issuance of short-term debt 2.5 2.4 Repayments of short-term debt — (7.8) Net proceeds from issuance of long-term debt — 1,748.5 Repayments of long-term debt (2,815.9) — Proceeds from issuance of common stock 51.9 59.6 Cash dividends paid (2,118.0) (2,078.1) Minimum tax withholdings on share-based awards (64.7) (80.6) Other — (9.2) Net cash provided by (used in) financing activities (4,944.2) (365.2) Effect of exchange rate changes on cash and cash equivalents (0.3) (19.2) Net increase/(decrease) in cash and cash equivalents 230.0 886.4 CASH AND CASH EQUIVALENTS: Beginning of period 3,219.8 3,286.2 End of period $ 3,449.8 $ 4,172.6 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest, net of capitalized interest $ 457.4 $ 392.5 Income taxes $ 413.6 $ 568.1 See Notes to Consolidated Financial Statements.
Consolidated cash flows / spending, dividends, financing and debt repayment · Filed 29/07/2026
During the three quarters ended June 28, 2026, and June 29, 2025, we made no share repurchases.
Note 11 / absence of repurchases during the first three quarters · Filed 29/07/2026
Element Form Objectives and Basis Base Salary Cash • Attract and retain highly qualified executives to drive our success Annual Incentive Bonus Cash • Drive short-term Company performance and promote our financial goals • Actual payout based on financial performance against pre-established goals for adjusted net revenue and adjusted operating income and individual performance Long-term Incentive PRSUs (60%) and time-based RSUs (40%) • Drive long-term Company performance, align interests of executives with those of shareholders, and retain executives through long-term vesting and potential wealth accumulation • PRSUs are earned based on three-year adjusted EPS performance and three-year comparable store sales measured against annual targets that are established at the beginning of each year in the performance period, subject to downward or upward adjustment of up to 25% based on our relative TSR performance measured over a cumulative three-year period.
Executive compensation / annual and long-term incentive design · Filed 26/01/2026
Each of our NEOs who was eligible to earn an annual cash incentive award under the Executive Management Bonus Plan earned an award equal to 54.8% of their target bonus opportunity based on our financial and operational results (payout of 39.7% of target) and their individual performance (payout of 100% of target) against their shared goals.
Executive compensation / actual fiscal 2025 bonus payouts · Filed 26/01/2026
“Back to Starbucks” PRSU Program In June 2025, the independent members of the Board of Directors and the Compensation Committee approved a “Back to Starbucks” grant of PRSUs with a target value of $6 million for our ceo and our executive vice presidents and a target value of $1 million for our senior vice presidents.
Executive compensation / June 2025 approval of turnaround PRSU grants · Filed 26/01/2026
Pursuant to SEC rules, the number of shares and the payout value for the PRSUs reflect payout at target given that the first full year of the performance period had not concluded as of September 28, 2025.
Outstanding equity awards / incomplete turnaround performance period · Filed 26/01/2026
As part of this review, the board has determined that the current leadership structure — with a combined board chair and ceo, a lead independent director, and all board committees composed entirely of independent directors — is appropriate for the Company at this time.
Corporate governance / combined chair and CEO with independent oversight · Filed 26/01/2026
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 28, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Independent auditor report / effective internal control over financial reporting · Filed 14/11/2025
• Directors are elected annually by majority vote.
Corporate governance / annual director elections by majority vote · Filed 26/01/2026
Reconciliation of revenues used in the Annual Incentive Bonus Plan Consolidated Year Ended(6) Sept 28, 2025 Sept 29, 2024 Oct 1, 2023 Net revenues, as reported (GAAP) $37,184.4 $36,176.2 $35,975.6 Impact of foreign currency translation 206.0 343.5 539.0 Impact of approved exceptions(5) 24.1 — — Adjusted net revenues (non-GAAP) $37,414.5 $36,519.7 $36,514.6 Reconciliation of operating income used in the Annual Incentive Bonus Plan Year Ended(6) Consolidated Sept 28, 2025 Sept 29, 2024 Oct 1, 2023 Operating income, as reported (GAAP) $2,936.6 $5,408.8 $5,870.8 Restructuring and impairment costs(1) 892.0 — 21.8 Litigation settlements(2) (145.2) — — Transaction and integration-related costs(3) 8.2 — 0.1 Gain on sale of assets — — (91.3) Non-GAAP operating income $3,691.6 $5,408.8 $5,801.4 Legal accruals and reserves — — 15.0 Impact of foreign currency translation 22.3 68.6 96.2 Impact of approved exceptions(5) 8.8 — — Adjusted non-GAAP operating income $3,722.7 $5,477.4 $5,912.6 A-2 STARBUCKS 2026 PROXY APPENDIX A – NON-GAAP MEASURES Table of Contents Reconciliation of EPS used in the Leadership Stock Plan and in Pay versus Performance Year Ended(6) Consolidated Sept 28, 2025 Sept 29, 2024 Oct 1, 2023 Diluted net EPS, as reported (GAAP) $1.630 $3.310 $3.580 Restructuring and impairment costs(1) 0.780 — 0.020 Litigation settlements(2) (0.130) — — Transaction and integration-related costs(3) 0.010 — — Gain on sale of assets — — (0.080) Income tax effect on non-GAAP adjustments(4) (0.160) — 0.020 Non-GAAP EPS $2.130 $3.310 $3.540 Legal accruals and reserves — — 0.010 Impact of foreign currency translation 0.020 0.040 0.068 Adjusted Non-GAAP EPS $2.150 $3.350 $3.618 (1) Represents costs associated with our restructuring efforts.
Appendix A / compensation performance-measure reconciliations and adjustments · Filed 26/01/2026
