Seattle-based coffee retailer Starbucks Corp.'s reported significantly lower sales and earnings than our previous expectations in fiscal 2024. Starbucks' weaker-than-expected earnings highlight a challenging operating environment marked by shifting consumer preferences, intensifying competition, cautious consumer spending, and an uneven recovery in China. We expect pressure to continue in 2025 and the company?s S&P Global Ratings-adjusted leverage to peak mid-fiscal 2025 in the low-3x area before improving to the high-2x area by year end. As a result, we revised our outlook on Starbucks to negative from stable and affirmed all of our ratings, including our 'BBB+' issuer credit rating and issue-level ratings. The negative outlook reflects the heightened risk that Starbucks? S&P Global Ratings-adjusted leverage could increase and remain above 3x
