Starbucks Q3 Preview: Earnings to decline amid same-store sales, China slowdown

Starbucks (NASDAQ:SBUX) is scheduled to announce Q3 earnings results on July 28th, after market close, with analysts expecting the company’s same-store sales to take a bigger hit than the Street’s forecast.

The coffee chain is expected to report a 31.2% year-on-year fall in its EPS to $0.64 while revenue is seen coming in at $9.31 billion, a 2.3% jump compared to the corresponding quarter a year ago.

Same-store sales in the U.S. is expected to decline more than the Street’s estimate of -2.2% compared to Q2’s -2%, Jefferies’ Andy Barish wrote in a note. The analyst estimates U.S. same-store sales to be down 3% in F3Q, improving to +1% in F4Q, below the consensus of +2%. International same-store sales is also expected to witness a slowdown, Jefferies noted.

Speaking about the company’s footing in China, Barish said that it continues to be a challenging competitive landscape, with many large and fast-growing rivals offering stronger value propositions than Starbucks, often at the expense of experience and quality.

In June, the company reduced the prices of dozens of iced beverages, primarily non-coffee items, by an average of 5 yuan nationwide to drive afternoon traffic. Despite this, Jefferies believes that ongoing competitive and macroeconomic pressures have likely driven operating margins in the China business close to zero.

Seeking Alpha analyst Aseity Research said in a recent article that the company’s in-store visits have been consistently declining over several quarters. In Q2 2025, foot traffic fell by 4%, following an 8% decline in Q1.

“Despite sales rising aggressively, the core retail experience is weakening. I believe this is masked by the drive-thru and mobile orders making the problem seem better than it is. Sales might be up and these instant gratification serving models might be driving growth, but the dilution of brand equity is not being addressed,” the analyst said.

As per Jefferies, foot traffic data from Placer.ai showed a slight improvement of 90bps in F3Q versus F2Q, but overall traffic remains weak. They have priced in a mid-single-digit traffic decline.

Jefferies has downgraded the stock to Underperform from Hold and set a $76 price target. The stock has added 3.35% in the year so far, below the S&P500’s rise of 8.62%.

Over the last 2 years, SBUX has beaten EPS estimates 38% of the time and has beaten revenue estimates 25% of the time. Over the last 3 months, EPS estimates have seen no upward revisions and 27 downward moves, while revenue estimates have seen no upward revisions and 21 downward adjustments.