On Thursday, shares of Starbucks Corporation (NASDAQ:SBUX) displayed volatility, ultimately retreating after initial gains, in the wake of the company's announcement of a redesigned Starbucks Rewards loyalty program coupled with the release of mixed fiscal first-quarter earnings results reported on the previous day. The coffeehouse chains' stock had initially responded positively but later reversed course into negative territory.
The newly introduced Starbucks Rewards scheme, slated for launch on March 10, reconfigures the existing benefits model into a three-tiered structure comprising Green, Gold, and Reserve levels. This tier system applies to a robust membership base of 35.5 million active participants in the United States.
The design of the program aims to foster enhanced customer engagement by assigning increasing benefits proportional to the number of Stars accumulated by members. Notably, the program incorporates accelerated Star-earning rates and introduces a new redemption milestone requiring 60 Stars for a $2 discount across any purchase. Furthermore, upper tiers—Gold and Reserve—will enjoy the advantage of Stars that maintain their validity indefinitely, whereas Green members can lengthen their Star expiration through consistent monthly activity.
Tressie Lieberman, Starbucks’ global chief brand officer, characterized the update as "redefining the industry with customer-focused benefits that set a new standard and ignite fandom," underscoring the company's strategic focus on elevating consumer loyalty.
Regarding fiscal performance, Starbucks reported adjusted earnings per share (EPS) of 56 cents and revenues amounting to $9.92 billion for the first quarter of fiscal year 2026. These figures compared to Wall Street expectations of 59 cents EPS on $9.63 billion in revenue, reflecting a revenue beat but a slight earnings miss.
The company posted a 4% increase in comparable store sales globally, with both North America and China markets contributing positively; the former growing by 4% and the latter by 7%. Importantly, Starbucks noted the first sign of comparable transaction growth within the U.S. market after an eight-quarter hiatus, effectively ending a two-year period of stagnation.
Brian Niccol, chairman and chief executive officer, affirmed confidence in the strategic trajectory, stating, "Our Q1 results demonstrate our ‘Back to Starbucks’ strategy is working and we believe we’re ahead of schedule." Looking forward, Starbucks anticipates global and U.S. comparable store sales growth of at least 3% in fiscal 2026, alongside an expected adjusted EPS range between $2.15 and $2.40. This forecast compares to analyst consensus estimates centered around $2.35 for EPS.
The company also plans to expand its brick-and-mortar footprint by opening between 600 and 650 new coffeehouses worldwide during the fiscal year.
Industry analysts maintain a generally optimistic stance on Starbucks’ performance. RBC Capital Markets analyst Logan Reich reaffirmed an Outperform rating and retained a $105 price target on the stock, a position supported by Starbucks’ recently shared long-term financial targets during its Investor Day event. The company’s multi-year strategy prioritizes enhancements in store productivity, cost management, and profitability growth in international markets.
Consensus from leading market analysts reflects a Buy rating with an average price target of approximately $99.78. Recent adjustments to price targets include Wells Fargo’s increase to $110 and maintenance of Overweight status as of January 29, alongside BTIG’s sustained Buy rating with a $105 target.
While Starbucks is currently valued at a premium price-to-earnings multiple relative to its peers, the robust forecasted earnings growth of about 41% is cited by analysts as justification for the stock’s approximately 5% upside potential from existing price targets.
Benzinga Edge’s scorecard assessing Starbucks highlights a comparatively weak value score (18.64) due to the stock’s elevated valuation, and a weak momentum score (20.44) as the share price underperforms the broader market. At the time of analysis, Starbucks shares were trading down approximately 0.54% at $94.64.
The mixed financial results coupled with a substantial change in the rewards program suggest both potential opportunities and challenges ahead for Starbucks as it seeks to balance growth with market expectations and investor sentiment.