11:20 AM EST, 01/24/2025 (MT Newswires) -- Starbucks ( SBUX ) investors are waiting to see the impact of recent operational changes, including the removal of non-dairy milk upcharge and freezing of incremental price increases, on traffic gains as Q1 same-store sales may face pressure due to tough comparisons, RBC Capital Markets said in an earnings preview emailed Friday.

The firm said that Q1 operating margins are expected to decline more than the Street's estimate due to increased investments in labor and operational changes but will recover later in the fiscal year as temporary investments phase out and efficiency improvements take hold.

The company faces headwinds in China because of weak consumer sentiments and competitive pressure from local coffee brands offering deep discounts, RBC added.

Increasing labor hours in over 3,000 stores has created a margin headwind for the company in Q1 and cost savings from planned workforce reduction will not materialize until H2 of fiscal 2025, according to the firm.

The brokerage has an outperform rating on Starbucks' ( SBUX ) stock with a price target of $115.

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