Starbucks Faces Earnings Decline Amid U.S. Sales Drop, China Deal Negotiations

Starbucks is facing significant challenges as it prepares to report its fiscal fourth-quarter earnings, with a projected 31% decline in earnings per share and a 2% decrease in U.S. same-store sales, highlighting competitive pressures from rivals like Dutch Bros and Luckin Coffee. The company’s shares have underperformed in 2025, reflecting investor caution amid slower domestic growth, store closures, and operational headwinds, despite management's efforts in product innovation and strategic shifts. Analysts value Starbucks at a premium compared to its recent share price, betting on its potential for margin improvement and turnaround, but remain skeptical about resolving deeper structural issues. Meanwhile, Starbucks is reportedly negotiating to sell a substantial part of its Chinese operations to Boyu Capital for around $4 billion, a move that could provide much-needed cash for its U.S. rebuilding efforts. These pressures come amid broader coffee industry challenges, including rising costs for coffee beans, shipping, and labor, which have contributed to a nearly 30% increase in consumer coffee prices. Overall, Starbucks must navigate both internal and external pressures in a highly competitive market while managing investor expectations and operational costs.