Starbucks Corp. (NASDAQ:SBUX) experienced a rise in its stock price on Wednesday after it unveiled its fiscal 2026 first-quarter financial performance, which presented a blend of encouraging top-line growth alongside some operational challenges. The company reported consolidated revenues of $9.92 billion, surpassing analysts' estimates of $9.63 billion. However, adjusted earnings per share (EPS) came in at 56 cents, missing consensus expectations of 59 cents per share.
The firm posted a 6% year-over-year increase in consolidated net revenues, marking a notable milestone by achieving U.S. comparable transaction growth for the first time in eight quarters. On a global scale, comparable store sales rose 4% year-over-year, driven by a 3% increase in transaction count and a 1% rise in average ticket size over the same period.
Despite the revenue gains, adjusted operating income declined by 11.0% year-over-year to $998.8 million, with operating margins compressing by 180 basis points to 10.1% during the reported quarter. When dissecting performance by region, North America showed a 4% year-over-year improvement in comparable store sales, while international markets posted a 5% increase. China's comparable store sales grew 7% year-over-year, demonstrating robust momentum.
In the North America division, operating income receded to $867.0 million from $1.2 billion in the preceding year, and the operating margin experienced a substantial contraction to 11.9% from 16.7%. These declines were primarily attributed to elevated labor costs linked to the “Back to Starbucks” initiative, tariff-related impacts, and rising coffee expenses.
Conversely, the International segment exhibited growth, with operating income advancing to $282.7 million from $237.1 million year-over-year. Operating margins expanded to 13.7% from 12.7%, benefiting from enhanced sales leverage alongside reductions in store operating expenses, depreciation, and amortization costs following the reclassification of China retail assets as held for sale.
Throughout the quarter, Starbucks opened 128 new stores, bringing its total to 41,118 locations worldwide at the quarter's end. The company's liquidity position remained solid, with approximately $3.41 billion in cash and cash equivalents as of the reporting date.
The board of directors declared a quarterly cash dividend of 62 cents per share, scheduled for payment on February 27, 2026, to shareholders recorded as of February 13, 2026.
Chief Executive Officer Brian Niccol remarked, "Our Q1 results demonstrate our ‘Back to Starbucks’ strategy is working and we believe we’re ahead of schedule. It’s encouraging to witness the sales momentum fueled by customers choosing Starbucks more frequently, and this marks just the beginning of our progress." Additionally, Chief Financial Officer Cathy Smith stated, "With our ‘Back to Starbucks’ initiatives maintaining traction, we have a clear perspective on converting topline strength into sustainable earnings growth, positioning us well for long-term profitability."
During the earnings conference call, Starbucks detailed its strategic plans for measured growth and margin recovery. Central to this approach is a commitment to achieve $2 billion in cost savings over the next two fiscal years, facilitated through tighter procurement processes, investments in technology, and enhancements in operational efficiency.
The company anticipates that fiscal 2026 revenue growth will align with global comparable sales increases, projecting an improvement in operating margins during the second half of the year as pressures from coffee inflation and tariffs, which are expected to peak in the second quarter, gradually ease.
Looking ahead, Starbucks forecasts roughly 3% global comparable store sales growth for fiscal 2026, supported by a robust pipeline of store development initiatives. The company plans to open between 450 and 500 new international locations, with nearly half situated in China, alongside 150 to 175 new company-operated stores in the United States.
Management emphasized that new protein menu offerings are contributing positively to customer traffic. However, they acknowledged that the company is currently not meeting its goal of reducing transaction times to four minutes, despite ongoing investments in the Green Apron service, which aims to drive earnings momentum.
For the fiscal year 2026, Starbucks projects global and U.S. comparable store sales growth of 3% or more, with consolidated net revenue expected to grow at a similar pace. Adjusted EPS guidance ranges from $2.15 to $2.40, compared to a consensus estimate of $2.35. Additionally, Starbucks plans to inaugurate between 600 and 650 new coffeehouses worldwide during the year.
In terms of corporate governance updates, Starbucks has revised its policy regarding CEO Brian Niccol's use of the company’s private jet following a security review mandated by the board. The updated policy requires the CEO to exclusively utilize corporate aircraft for all travel, including personal trips. Notably, the company has eliminated the former cap that restricted company-paid personal travel expenses to $250,000 annually, and CEO Niccol is no longer obligated to reimburse Starbucks for non-business flights.
At the time of publication on Wednesday, Starbucks shares traded up 7.45%, reaching $102.85, according to Benzinga Pro data.