Starbucks Reports Mixed Quarterly Results, Signals Turnaround Success
Starbucks announced mixed quarterly results, demonstrating traffic growth for the first time in two years. This growth was attributed to its turnaround strategy, though it impacted the company's net income.
CEO Brian Niccol stated that the Q1 results indicate the 'Back to Starbucks' strategy is effective and ahead of schedule, citing sales momentum from increased customer visits.
Financial Outlook and Quarterly Performance
Starbucks released its first financial outlook since October 2024, forecasting adjusted earnings per share between $2.15 and $2.40 for fiscal 2026. This projection is on the lower side of Wall Street's estimates of $2.35 per share. The company anticipates at least 3% global and U.S. same-store sales growth. Following the report, shares increased by over 8% in premarket trading.
For the quarter ended December 28, Starbucks reported:
- Adjusted earnings per share: 56 cents, which was below the expected 59 cents.
- Revenue: Reached $9.92 billion, exceeding the expected $9.67 billion.
Net income attributable to Starbucks for the fiscal first quarter was $293.3 million, or 26 cents per share. This represents a decrease from $780.8 million, or 69 cents per share, reported in the prior year. Factors contributing to this decrease included turnaround costs, higher coffee prices, and tariffs.
Sales and Market Growth
Net sales increased by 6% to $9.92 billion, marking the second consecutive quarter of same-store sales growth. Global same-store sales rose 4%, surpassing StreetAccount estimates of 2.3%, with traffic growing by 3% for the first time in two years.
U.S. and International MarketsU.S. same-store sales increased by 4%, driven by demand for holiday offerings. International same-store sales grew 5%, including a 7% rise in China, the company's second-largest market.
Starbucks also announced plans for a joint venture with Boyu Capital for its China operations, expected to close in fiscal 2026's second quarter, subject to regulatory approval. The fiscal 2026 forecast includes continued operation of Starbucks China retail stores in the latter half of the year.
Store Development
During the quarter, Starbucks opened 128 net new locations. The company plans to open 600 to 650 new company-owned and licensed cafes in fiscal 2026, following the closure of approximately 400 U.S. locations last year.
Upcoming Investor Day
Further details on the company's strategy and new long-term financial targets are anticipated at an investor day scheduled for Thursday in New York City.