(Alliance News) - Starbucks Corp on Tuesday reported a weaker third quarter, marred by declining sales, though shares rose as executives praised their "Back to Starbucks" strategy.

Shares in the Seattle, Washington-based coffee house chain traded up 3.8% after hours in New York on Tuesday. They had earlier closed down 0.8% at USD92.96.

In the third quarter to June 30, net earnings sank to 558.3 million from USD1.05 billion a year prior, or to USD0.49 per diluted share from USD0.93.

Revenue was USD9.46 billion compared to USD9.11 billion.

North America revenue increased 2% primarily due to net new company-operated store growth of 5% over the past 12 months. This increase was partially offset by a 2% decline in comparable store sales, driven by a 3% decline in comparable transactions, partially offset by a 1% increase in average ticket. Also contributing was a decline in licensed store business.

International revenue climbed 11%. Channel development revenue rose 10%.

Third quarter global like-for-like sales edged sales down 2% on-year.

Chief Executive Officer Brian Niccol commented: "We've fixed a lot and done the hard work on the hard things to build a strong operating foundation, and based on my experience of turnarounds, we are ahead of schedule. In 2026, we'll unleash a wave of innovation that fuels growth, elevates customer service, and ensures everyone experiences the very best of Starbucks. We're building back a better Starbucks experience and a better business," Niccol added.

"We are making tangible progress in our 'Back to Starbucks' strategy. In the quarter, we made a significant non-recurring investment in our Leadership Experience 2025 and also incurred a discrete tax item, which in the aggregate, negatively impacted Q3 EPS by USD0.11," commented Cathy Smith, chief financial officer. "We are focused on growing back better and delivering durable, sustainable long-term growth."

Operating income decreased to USD918.7 million in the quarter from USD1.4 billion a year ago. Operating margin of 13.3% contracted from 21.0%, primarily driven by deleverage, investments in support of "Back to Starbucks" including additional labor and the Leadership Experience 2025 and inflation.

This also led GAAP operating margin to contract 680 basis points year-over-year to 9.9%.

On a comparable basis, North American and US store sales declined by 2%. International comparable store sales were flat. Of this China comparable store sales increased 2%.

By Aidan Lane, Alliance News reporter

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