Prime Highlights:
- Starbucks reported its first increase in customer visits in two years, signaling early success in CEO Brian Niccol’s turnaround strategy.
- Global same-store sales rose 4%, with strong performance in both the U.S. and China, showing growing demand for the brand.
Key Facts:
- Fiscal Q1 revenue reached $9.92 billion, beating analyst expectations, while adjusted earnings were 56 cents per share.
- Starbucks opened 128 net new locations during the quarter and plans to launch 600–650 new stores in fiscal 2026.
Background:
Starbucks shares climbed nearly 5% in early trading on Wednesday after the coffee chain reported a return to customer traffic growth for the first time in two years, signaling early success in its ongoing turnaround strategy. While the company missed earnings expectations for the fiscal first quarter, stronger sales momentum helped lift investor sentiment.
For the quarter ended December 28, Starbucks posted adjusted earnings of 56 cents per share, slightly below analysts’ expectations of 59 cents. Revenue, however, exceeded forecasts, rising 6% year over year to $9.92 billion, compared with Wall Street estimates of $9.67 billion. The company’s net income fell to $293.3 million from $780.8 million a year earlier, pressured by higher coffee costs, tariffs, and expenses tied to restructuring efforts.
The plan focuses on improving in-store efficiency, customer service, and menu execution. According to the company, global same-store sales rose 4% during the quarter, well above market expectations, while customer transactions increased 3%, marking the first growth in visits since fiscal 2022.
U.S. same-store sales rose 4%, helped by strong holiday demand and popular drinks like the peppermint mocha. Niccol said the company’s “Green Apron Service” program, which focuses on better service and smoother café operations, played a key role in improving the customer experience.
International markets also delivered solid performance. Same-store sales outside the U.S. rose 5%, with China posting a 7% increase. During the quarter, Starbucks announced plans to form a joint venture with Boyu Capital to expand its China operations, a move aimed at accelerating growth in more cities and strengthening its long-term presence in the market.
Starbucks opened 128 net new stores during the quarter and plans to add 600 to 650 locations globally in fiscal 2026, following the closure of roughly 400 U.S. stores last year. The company also reinstated its financial outlook, projecting adjusted earnings per share between $2.15 and $2.40 in fiscal 2026, along with at least 3% same-store sales growth.
Investors are now looking ahead to the company’s investor day in New York, where Starbucks is expected to outline its long-term financial goals and provide further details on its turnaround strategy.
