Starbucks sales miss expectations, but its U.S. turnaround is gaining steam

Summary

• Starbucks reported mixed quarterly results with international cafes underperforming expectations while U.S. operations exceeded forecasts in the final quarter of fiscal 2026.
• CEO Brian Niccol stated the company is ahead of schedule to meet fiscal 2028 targets established at its January investor day.
• Fiscal 2027 adjusted earnings per share are projected between $3.15 & $3.25, surpassing Wall Street expectations of $3.14, though a 1% revenue decline falls short of the 1.4% growth forecast.
• North American same-store sales are projected to grow 4% for the fiscal year.
• The earnings outlook includes an additional week & the impact of the China business shift to a joint venture model.
• CFO Cathy Smith noted slight deflation in coffee prices & slowing net new North American cafe openings will weigh on full-year revenue.
• For the quarter ended Sept. 27, adjusted earnings per share were 80 cents vs. 72 cents expected, while revenue was $9.14 billion vs. $9.23 billion expected.
• Fiscal fourth-quarter net income attributable to the company was $677.2 million, or 59 cents per share, up from $133.1 million, or 12 cents per share, a year earlier.
• Net revenue fell 4% to $9.14 billion, reflecting the joint venture deal in China.
• Global same-store sales increased 7.2%, fueled by growth in average ticket, beating Wall Street estimates of 6%, while transactions grew 1.8%.
• U.S. cafes reported same-store sales growth of 7.7%, topping StreetAccount estimates of a 6.5% increase.
• The "Back to Starbucks" strategy has focused on improving service, making cafes more welcoming, & sharpening marketing to win back customers.
• Starbucks brand affinity is at near record levels due to menu innovation, marketing, & merchandise.
• The North American fall menu launch was the company's strongest ever autumn launch day, & matcha is now a $1 billion drink.
• International comparable sales outside North America increased 0.9%, falling short of analyst estimates of a 3.2% increase as traffic declines offset average ticket growth.
• Following the China joint venture transition, most international business has shifted to a licensed model, & the company is exploring selling a majority stake in its Japan business.
• Starbucks opened 303 net new cafes during the quarter.
• The company announced in September it would close about 250 North American locations, representing 1% of its footprint.
• By the end of the fiscal year, the company completed more than 1,700 cafe uplifts across the U.S. & Canada to make stores more welcoming.