Starbucks' (SBUX) fiscal Q3 outlook appears soft, with management indicating that North America same-store sales may decline and revenue remain flat amid continued margin pressure, RBC Capital Markets said in a note Wednesday.

The company reported weaker-than-expected earnings before interest and taxes margins in Q2 and announced a shift toward increased labor investments, rather than new store equipment, to drive transaction growth, RBC said.

Starbucks is rolling out a new labor model that adds staff hours and enhances mobile ordering efficiency. Tests under the new model showed faster service and reduced wait times, according to the note.

Although Starbucks hedges its coffee exposure, RBC cautioned that rising coffee prices and potential tariffs could weigh on future margins and profitability.

Store expansion is expected to slow as the company reassesses its global portfolio in response to elevated construction costs and lower investment returns, the brokerage said.

RBC maintained an outperform rating on Starbucks but lowered its price target to $95 from $100.

Shares of Starbucks were down 6.1% in recent trading.

Price: 79.68, Change: -5.17, Percent Change: -6.09