Starbucks Fourth Quarter and Full Fiscal Year 2026 Earnings Conference Call - STARBUCKS CORP

Explicit Guidance (Fiscal 2027):

• Revenue: Consolidated net revenues expected to decrease ~1% YoY (includes ~$700M revenue from 53rd week); North America net revenue expected to slightly exceed comp growth (4%); Channel Development net revenues expected to decline ~10%.
• Comps: North America company-operated comps guidance of ~4%; International comps expected to accelerate with ~1,100 net new openings (driving ~50% growth in unit openings vs. FY26).
• Margins: Consolidated operating margin expected at 13.5%–14% (midpoint ~13.75%, up ~190 bps from FY26); North America margin expected to drive leverage; International margin expected to start near 20% and improve slightly; Channel Development margin expected to remain in mid-to-high 40% range.
• EPS: Full-year EPS guidance of $3.15–$3.25 (midpoint ~18% growth YoY), including >$0.10 benefit from the 53rd week.
• Tax: Effective tax rate expected roughly in line with or slightly below FY26 (~24.7%).
• Capex: Capital expenditures expected at ~5% of net revenues.
• Capital Allocation: Quarterly dividend raised to $0.63/share (16th consecutive annual increase); Share repurchases expected to total ~$1 billion.
• Unit Growth: ~1,200 net new coffeehouses globally; International ~1,100 net openings (China ~50%); North America ~90–100 net new openings (~50% licensed).

Business-Segment Outlook:

• North America: Focus on extending morning peak from 3 to 4 hours and building an afternoon peak (targeting 3 hours); 90-day active Rewards members at 36M (record); >2,000 store uplifts planned to restore "Third Place" experience; <100 net new company-operated openings in FY27 due to pipeline reset, with ramp to >300 openings in FY28.
• International: Leading unit growth with ~1,100 net new openings; China retail operations deconsolidated (impact on FY27 revenue); Long-term target to grow footprint from 23,000 to nearly 40,000 stores globally, including potential to double presence in China and India.
• Channel Development: Focus on maintaining #1 position in at-home/RTD coffee; anticipated 10% revenue decline due to coffee price trends and lack of tailwinds.
• Product & Menu: Expansion of "functional and zero-sugar" beverages, protein-forward choices, and portable options; Food platforms moving from morning-only to afternoon focus; Holiday merchandise and tiramisu latte launches; 5000 additional North American stores long-term opportunity identified.

Market and Competitive Outlook:

• Demand Trends: Shift toward experiences "worth it"; balanced contribution from ticket and transactions in FY26; FY27 expected to lean slightly more toward ticket (price/mix/attach) with transaction growth led by operational health.
• Pricing: Full-year FY27 pricing expected to remain well below CPI; Coffee price impacts anticipated to be neutral to slightly positive (deflationary tailwinds).
• Supply & Operations: Daily delivery target reaching 90% of North America company-operated stores; Inventory availability at all-time high; Focus on "Green Apron Service" driving consistency and throughput.
• Share Shifts: No explicit market share numbers, but management asserts "strong brand" and "near-record brand affinity."

Macro / Industry Outlook:

• Economy/Rates: No specific macroeconomic forecasts provided; Management acknowledges consumers are "choiceful" in spending but resilient due to brand strength.
• FX/Currency: Metrics referenced in constant currency; China transition (company-operated to licensed JV) is a primary driver of revenue changes through H1 FY27.
• Regulation/Tariffs: No specific regulatory or tariff impacts detailed in guidance; focus remains on operational execution and cost savings.

Strategic Initiatives:

• Technology: Q2 FY27: Integration of delivery into Starbucks app with star earning/redeeming; AI testing for search/discovery and "agentic ordering"; Background AI models in drive-thru to improve accuracy and speed; Mobile ordering from cars/emerging AI platforms.
• Digital/APP: Enhancing app intuition, personalized recommendations, and digital menus; Integrating 7-day/24-hour fulfillment supply chain capabilities.
• Store Formats: Testing "Mestrina 3" espresso machines and next-generation drive-through concepts; 2,000 store uplifts in FY27; Prototype small-format stores rolling out post-Investor Day.
• Supply Chain: Modernization of forecasting, ordering, and replenishment cycles to improve availability and reduce waste; Targeting 24-hour replenishment within 6–12 months.
• Partners: Expansion of "Coffeehouse Coaches" (>3,000 in Q4) to improve leadership stability; Tech modernization for staffing and scheduling systems.

Risks and Headwinds to Outlook:

• Revenue Volatility: International revenue decline in FY27 driven by lapping China's company-operated operations; Coffee price deflation trends.
• Execution Risks: Timeline for drive-thru AI and app delivery integration depends on successful testing; "Pipeline reset" may limit new store openings in FY27.
• Cost/Inflation: Potential for "less variability" in margins but continued exposure to product mix and distribution costs.
• Caveats: Guidance assumes successful implementation of operational improvements and cost savings (50% of $2B gross savings program achieved, with focus on COGS and OpEx in FY27-28).

Management Tone on the Future:

• Confidence Level: High; "Back to Starbucks" explicitly characterized as a "growth plan" rather than turnaround.
• Momentum: "Ahead of schedule" relative to FY28 framework; Five consecutive quarters of comp growth; Three consecutive quarters of margin expansion.
• Strategic Shift: Pivot from cost-cutting/turnaround to disciplined growth via operational fundamentals, digital innovation, and store expansion.
• Outlook: "Clear path to consistent comp growth and stronger earnings"; Optimistic about long-term unit growth (5,000 additional NA stores).

Miscellaneous:

• Calendar: FY27 is a 53-week year; Q1 FY27 earnings call tentatively scheduled for Jan 27, 2027.
• Segment Reporting: China operations now reported as licensed business/JV income; International company-operated comps now largely driven by UK and Japan.