Starbucks Corp.
Consolidated net revenue was up 6% year-over-year (Y/Y) with the company reporting U.S. comparable transaction growth for the first time in eight quarters.
Global comparable store sales climbed 4% Y/Y, thanks to 3% Y/Y increase in comparable transactions and a 1% Y/Y rise in average ticket.
Adjusted operating income declined 11.0% Y/Y to $998.8 million, with margins contracting 180 bps Y/Y to 10.1% in the quarter.
By geography, comparable store sales rose 4% Y/Y in North America and increased 5% Y/Y internationally, with comparable store sales in China rising 7% Y/Y in the quarter.
In the North America segment, operating income fell to $867.0 million in the first quarter of fiscal 2026 from $1.2 billion a year earlier. Operating margin contracted significantly to 11.9% from 16.7%, due to higher labor investments tied to the "Back to Starbucks" initiative, the impact of tariffs, and increased coffee costs.
Meanwhile, in the International Segment, operating income rose to $282.7 million from $237.1 million a year earlier, with operating margin expanding to 13.7% from 12.7%.
Margins benefitting from sales leverage and lower store operating expenses, as well as depreciation and amortization expenses after classifying China retail assets as held for sale.
Other Key Metrics
Starbucks opened 128 stores in the quarter and ended the period with 41,118 total locations.
The company said it had approximately $3.41 billion in cash and cash equivalents at quarter's end.
Starbucks' board declared a cash dividend of 62 cents per share, payable on February 27, to shareholders of record as of February 13, 2026.
"Our Q1 results demonstrate our 'Back to Starbucks' strategy is working and we believe we're ahead of schedule," commented Brian Niccol, chairman and chief executive officer. "It's great to see the sales momentum driven by more customers choosing Starbucks more often, and this is just the beginning."
"With our 'Back to Starbucks' initiatives gaining traction, we have clear line of sight to translating topline strength into sustainable earnings growth that positions us for long-term profitable growth," commented Cathy Smith, chief financial officer.
Earnings Call
Starbucks outlined a measured growth and margin recovery plan on its earnings call, anchored by $2 billion in cost savings over the next two years through tighter procurement, technology investments, and operational efficiency.
The company expects fiscal 2026 revenue growth to track global comparable sales, with operating margins improving in the back half as coffee inflation and tariff pressures peak in the second quarter and ease later in the year.
Starbucks forecasts 3% global comp sales growth in fiscal 2026, supported by a strong development pipeline, while planning 450-500 international store openings, nearly half in China, and 150-175 new U.S. company-operated stores.
Management highlighted protein offerings as a traffic driver but acknowledged the company is still falling short of its four-minute transaction-time goal, even as investments in the Green Apron service aim to build earnings momentum.
Outlook
For fiscal 2026, the company expects global and U.S. comparable store sales growth of 3% or greater, with consolidated net revenues growing at a similar rate and adjusted EPS in the range of $2.15 to $2.40 (versus consensus of $2.35).
Starbucks projects to open 600 to 650 new coffeehouses globally.
Loosens Private Jet Rules For CEO
The coffee giant has removed limits on CEO Brian Niccol's use of the company's private jet, mandating that he fly exclusively on corporate aircraft for all travel, including personal trips, after a board-ordered security review.
Under the revised policy, Niccol no longer has to reimburse Starbucks for non-business flights, reversing a prior arrangement that capped company-covered personal travel at $250,000 a year.
SBUX Price Action: Starbucks shares were up 7.45% at $102.85 at the time of publication on Wednesday, according to Benzinga Pro data.
