Starbucks Corp. (NASDAQ:SBUX)

The profitability ratios exhibited significant fluctuations over the observed period. Generally, the metrics demonstrate a strong recovery and expansion following the initial period, followed by a more recent decline. This suggests a period of robust growth potentially impacted by evolving economic conditions or company-specific factors in later quarters.

Gross Profit Margin

The gross profit margin experienced a notable increase from 20.94% in December 2020 to a peak of 28.87% in October 2021. Following this peak, the margin generally trended downwards, reaching 21.90% in September 2025. This decline, while gradual initially, accelerates in the latter part of the period, ending at 21.90%. The initial increase likely reflects improved cost management or pricing strategies, while the subsequent decline could indicate rising input costs or increased competitive pressure.

Operating Profit Margin

The operating profit margin mirrored the trend of the gross profit margin, with a substantial rise from 5.42% in December 2020 to 16.92% in January 2022. A subsequent decline is observed, with the margin falling to 7.90% in September 2025. This suggests that while the company initially improved its operational efficiency, later periods saw increased operating expenses relative to revenue. The magnitude of the decline is more pronounced than that of the gross profit margin, indicating potential issues with expense control beyond the cost of goods sold.

Net Profit Margin

The net profit margin followed a similar trajectory, increasing from 2.87% in December 2020 to a high of 14.47% in January 2022, before decreasing to 3.63% in September 2025. This pattern suggests that factors impacting both gross profit and operating expenses ultimately affect the bottom line. The decline in the net profit margin is particularly noteworthy, indicating a shrinking portion of revenue translating into profit for shareholders.

Return on Assets (ROA)

The return on assets increased significantly from 2.22% in December 2020 to a peak of 15.24% in January 2022. The ROA then decreased to 4.25% in September 2025. This indicates that the company became more efficient in utilizing its assets to generate earnings initially, but this efficiency diminished over time. The decline in ROA aligns with the observed trends in the profit margins.

The absence of Return on Equity (ROE) values limits a complete assessment of profitability from a shareholder perspective. However, the observed trends in the available ratios suggest a period of strong performance followed by a weakening of profitability, potentially requiring further investigation into the underlying drivers of these changes.

The gross profit margin exhibited considerable fluctuation over the analyzed period, spanning from December 2020 to December 2025. An initial upward trend is observed, followed by periods of relative stability and subsequent decline.

Initial Growth Phase (Dec 2020 - Oct 2021)

From December 2020 to October 2021, the gross profit margin demonstrated a consistent increase, rising from 20.94% to 28.87%. This suggests improving cost management relative to revenue, or potentially a shift in product mix towards higher-margin offerings during this timeframe. The most significant increase occurred between March 2021 and June 2021.

Period of Stability and Slight Decline (Oct 2021 - Apr 2023)

Following the peak in October 2021, the gross profit margin experienced a period of relative stability with a slight downward trend. It fluctuated between 25.78% and 28.59% before settling at 27.67% in April 2023. This indicates that while significant deterioration wasn't occurring, the earlier positive momentum had stalled.

Downward Trend (Apr 2023 - Dec 2025)

A clear downward trend became apparent starting in April 2023. The gross profit margin decreased from 27.67% to 21.90% by December 2025. This decline suggests increasing costs of goods sold relative to net revenues, potentially due to inflationary pressures on input costs, changes in sourcing strategies, or increased promotional activity impacting pricing. The most substantial decrease occurred between March 2024 and December 2025.

Recent Performance (Sep 2024 - Dec 2025)

The final six months of the analyzed period show continued decline, with the gross profit margin falling from 26.84% in September 2024 to 21.90% in December 2025. This reinforces the observation of a sustained negative trend in profitability.

Overall, the gross profit margin demonstrates a cyclical pattern with a strong initial increase, a period of consolidation, and a more recent, pronounced decline. Further investigation into the underlying drivers of these fluctuations, such as cost of goods sold components and revenue mix, would be necessary to fully understand the observed trends.

The operating profit margin exhibited significant fluctuation over the analyzed period. Initially, the margin demonstrated a positive trend, culminating in a peak during the latter half of 2021 and continuing into early 2022. However, subsequent quarters revealed a decline, with a particularly pronounced decrease observed towards the end of the period.

Initial Growth Phase (Dec 2020 – Jan 2022)

The operating profit margin increased from 5.42% in December 2020 to a high of 16.92% in January 2022. This growth suggests improving operational efficiency, potentially driven by increased sales volume and effective cost management. The substantial increase from December 2020 to June 2021 is particularly noteworthy, indicating a strong recovery or positive shift in business conditions.

Stabilization and Initial Decline (Apr 2022 – Oct 2022)

Following the peak in January 2022, the operating profit margin remained relatively stable, fluctuating between 14.26% and 16.64% through October 2022. While still representing a healthy margin, this period signals a potential plateau in operational performance. A slight downward trend becomes visible during this phase.

Accelerated Decline (Jan 2023 – Sep 2025)

A more pronounced decline in the operating profit margin commenced in January 2023, falling to 12.51% by December 2024 and continuing to 7.18% by September 2025. This suggests increasing cost pressures, potentially related to supply chain disruptions, labor costs, or increased marketing expenses, that are not being fully offset by revenue growth. The most significant drop occurs between June 2025 and September 2025.

Overall Trend

The overall trend indicates a shift from a period of strong profitability to one of increasing margin compression. While initial growth was robust, the latter portion of the analyzed period demonstrates a clear deterioration in operating profitability. Further investigation into the underlying drivers of this decline is warranted.

The operating income also generally followed the trend of the operating profit margin, increasing until early 2022 and then experiencing fluctuations with an overall downward trend. Net revenues generally increased over the period, but the rate of revenue growth did not consistently outpace the increase in costs, contributing to the margin decline.

The net profit margin exhibited significant fluctuation over the analyzed period, spanning from December 2020 to September 2025. Initially, the metric demonstrated a substantial upward trajectory, followed by a period of stabilization and subsequent decline.

Initial Growth Phase (Dec 2020 – Jun 2021)

The net profit margin began at 2.87% in December 2020 and increased markedly, reaching a peak of 10.43% in June 2021. This represents a period of rapid improvement in profitability, potentially driven by increased revenue or effective cost management.

Stabilization and Moderate Decline (Jul 2021 – Oct 2022)

Following the peak, the net profit margin remained relatively high, fluctuating between 10.18% and 14.47% through October 2022. While still strong, a slight downward trend is observable during this period, suggesting potential pressures on profitability.

Continued Decline (Jan 2023 – Sep 2025)

From January 2023 onwards, a more pronounced decline in the net profit margin is evident. The metric decreased from 10.09% to 3.63% by September 2025. This decline appears to be accelerating in the later quarters, with a significant drop to 4.99% in June 2025 and further to 3.63% in September 2025. This suggests increasing challenges in maintaining profitability, potentially due to rising costs, increased competition, or shifts in revenue mix.

Recent Performance (Dec 2023 – Sep 2025)

The most recent data indicates a concerning trend. The net profit margin in December 2023 was 11.70%, but decreased to 8.61% by December 2024, and further to 3.63% by September 2025. This represents a substantial erosion of profitability within a relatively short timeframe.

Overall, the analysis reveals a shift from a period of strong and improving profitability to a period of consistent decline. The recent performance warrants further investigation to identify the underlying causes and implement corrective measures.

The provided financial information details net earnings attributable to Starbucks and shareholders’ deficit over a multi-year quarterly period, culminating in a calculated Return on Equity (ROE). While net earnings fluctuate considerably, a notable trend emerges in the shareholders’ deficit, which remains consistently negative throughout the observed timeframe. The ROE values are initially absent but become a focal point for analysis as the period progresses.

Net Earnings Trend

Net earnings demonstrate significant volatility. A substantial increase is observed from December 2020 to October 2021, peaking at US$1,764.3 million. Subsequently, earnings decline to US$815.9 million in January 2022, followed by further fluctuations throughout 2022. A resurgence occurs in the first half of 2023, reaching US$1,141.7 million in July 2023. However, earnings then decrease markedly in the latter half of 2024, culminating in a significantly lower value of US$384.2 million in December 2024. This pattern continues into 2025, with further declines observed in the subsequent quarters.

Shareholders’ Deficit Trend

The shareholders’ deficit consistently remains negative, indicating a liability position. The magnitude of the deficit decreases from approximately US$7.9 billion in December 2020 to around US$5.3 billion in October 2021. However, the deficit then increases again, reaching approximately US$8.7 billion by October 2022 and remaining in that range through much of 2023. A gradual reduction is observed in 2024, but the deficit increases again in 2025, reaching approximately US$8.4 billion by December 2025.

Return on Equity (ROE) Trend

ROE values begin to appear later in the observed period. While a clear trend is difficult to establish due to the limited availability of ROE figures, the values suggest a fluctuating performance. The ROE is not available until later in the period, making it difficult to assess the relationship between net income and equity in the earlier quarters. The available ROE values indicate a period of instability, with significant fluctuations observed across the reported quarters.

The consistent negative shareholders’ deficit warrants further investigation. The volatility in net earnings, coupled with the persistent deficit, suggests potential challenges in maintaining consistent profitability and shareholder value. The limited ROE data makes it difficult to draw definitive conclusions about the company’s overall financial performance, but the available figures indicate a period of instability. Continued monitoring of these metrics is recommended to assess the long-term financial health of the organization.

The Return on Assets (ROA) exhibited a generally increasing trend over the analyzed period, punctuated by fluctuations. Initial values were relatively modest, but demonstrated substantial growth before stabilizing and then declining towards the end of the observation window.

Initial Growth Phase (Dec 27, 2020 – Jun 27, 2021)

The ROA began at 2.22% in December 2020 and increased significantly, reaching 9.59% by June 2021. This period reflects a substantial improvement in profitability relative to the asset base. The increase suggests improved efficiency in utilizing assets to generate earnings.

Peak Performance & Stabilization (Jul 3, 2021 – Jan 1, 2023)

Following the initial growth, the ROA continued to climb, peaking at 15.24% in January 2022. It remained at a high level, fluctuating between 11.73% and 14.71% through January 2023. This indicates a sustained period of strong asset utilization and profitability. The relatively stable values during this period suggest consistent operational performance.

Declining Trend (Apr 2, 2023 – Sep 28, 2025)

From April 2023 onwards, a downward trend in ROA became apparent. The ratio decreased from 14.16% to 5.80% by September 2025. This decline suggests a weakening in the company’s ability to generate earnings from its assets. The most significant drop occurred between March 30, 2025 (9.89%) and September 28, 2025 (5.80%).

Net Earnings & Total Assets Relationship

The ROA’s trajectory correlates with changes in both net earnings and total assets. The initial increase in ROA coincided with rising net earnings. While total assets also fluctuated, the growth in net earnings outpaced these changes, driving the ROA higher. The subsequent decline in ROA appears linked to a combination of decreasing net earnings and increasing total assets, particularly evident in the later quarters.

Overall, the ROA demonstrates a cyclical pattern of growth, stabilization, and decline. The recent downward trend warrants further investigation to identify the underlying factors contributing to reduced profitability relative to the asset base.