Starbucks' China JV shift reshapes revenue and margin outlook

Starbucks Corp. (NASDAQ: SBUX) is moving into a new reporting structure for its China operations following the close of its previously announced transaction with Boyu Capital, shortly after the end of Q2 2026. Under the agreement, Boyu has acquired a 60% stake in Starbucks’ China retail operations, with Starbucks retaining a 40% holding alongside control of its brand and intellectual property. From Q3, the China retail business will be deconsolidated and folded into the group’s licensed segment

Consensus expectations already reflect the accounting change. For Q3, the company’s international company-operated sales are projected to decline 55% year-on-year to $692 million, while international licensed sales are projected to increase 31% to $608 million. International retail stores are projected to decline to 2,465, from 10,435 last quarter, while licensed stores increase from 12,309 last quarter to 20,446 in Q3.

While the transition lowers reported China-related revenues, analysts expect the new China joint venture structure to be margin accretive. Q3 non-GAAP operating income is expected to rise 15% year-on-year to $1.1 billion, while non-GAAP earnings attributable to Starbucks are projected to increase 29% to $741 million.

Despite the accounting reset, China remains an important part of Starbucks’ international growth agenda with the company planning to expand its footprint from more than 1,000 county-level cities today to more than 1,500 over the next three years.

 This article was published by Visible Alpha, part of S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.