The China "divestiture" isn't actually what it seems. Everyone thinks Starbucks sold their stores to Boyu Capital and walked away. In reality, they created a joint venture, sold 60% for a mix of cash and debt raised by the new JV, and kept a 40% stake worth $1.2B. The deal wasn't an exit, it's actually a leveraged bet on future growth.
The gross margin improvement is interesting as well. They got tariff refunds after a Supreme Court ruling that IEEPA tariffs were unlawful. They received all the refunds they requested, which directly offset tariffs paid earlier in the year. This is basically one-off. So the margin recovery may be coming from the government, not from operational excellence.
Starbucks paid $2.1B in cash dividends to shareholders in the first nine months of FY2026. That's more than their net earnings of $1.85B for the same period. They're using one-time China proceeds to fund shareholder payouts. I don't find that sustainable long-term, and they're increasing their payout year by year as well.
Sharing in case others find it useful, and please correct me if I'm wrong :)
Source: [https://investor.starbucks.com/financials/sec-filings/default.aspx](https://investor.starbucks.com/financials/sec-filings/default.aspx)