Starbucks Corp.

Starbucks Corporation's Board of Directors has approved a major restructuring plan as part of its 'Back to Starbucks' strategy, focusing on revitalizing its physical coffeehouses and enhancing the overall customer experience. This initiative involves a critical assessment of the existing store portfolio, leading to the closure of coffeehouses that lack a viable path to consistent brand environment or strong financial performance. Concurrently, the company is undertaking a significant transformation of its support organization to streamline operations and reallocate resources closer to the coffeehouse and customer.

**Financial Performance Breakdown:** While specific Q3 2025 revenue, net income, or EPS figures are not provided in this 8-K, the company estimates approximately $1 billion in total restructuring charges. A substantial 90% of these expenses are attributable to the North America business, with a significant portion expected to be incurred in fiscal year 2025. The breakdown of these charges includes approximately $150 million for employee separation benefits, $400 million for the disposal and impairment of company-operated store assets, and $450 million primarily for accelerated amortization of ROU lease assets and other lease costs due to early store closures. Of the total, approximately $400 million are estimated non-cash charges related to asset impairment and disposal, while the remaining $600 million are future cash expenditures for employee benefits and lease exit costs.

**Strategic Initiatives and Business Segment Analysis:** The 'Back to Starbucks' strategy underscores a commitment to operational excellence and customer-centricity. By closing underperforming stores, Starbucks aims to optimize its physical footprint, ensuring all remaining locations align with its brand standards and contribute positively to financial performance. The restructuring of the support organization is intended to create a more agile and efficient corporate structure, enabling greater investment and focus at the store level. The heavy concentration of charges in North America suggests this region is a primary focus for revitalization efforts.

**Management Commentary and Forward Guidance:** The announcement, highlighted by a letter from Chairman and CEO Brian Niccol, signals a decisive move to strengthen the company's foundation. While no explicit forward guidance on future earnings was provided, the completion of most store closures by the end of the current fiscal year indicates a swift execution timeline for this foundational phase of the strategy. The company emphasizes building a 'stronger and more resilient Starbucks.'

**Competitive Positioning and Market Trends:** This restructuring positions Starbucks to better compete in a dynamic market by addressing underperforming assets and reinvesting in core customer experiences. It reflects a trend among retailers to optimize physical footprints in response to evolving consumer behaviors and competitive pressures.

**Risk Factors and Concerns Raised:** The primary concern is the substantial $1 billion in restructuring charges, which will impact fiscal year 2025 earnings. There are inherent risks associated with executing such a large-scale transformation, including potential disruption to operations, employee morale impacts, and the challenge of realizing the intended benefits. The forward-looking statements also acknowledge general industry, global, and economic conditions as potential factors that could cause actual results to differ materially.