After two long years of stagnation, Starbucks is finally brewing up a comeback, and investors are sipping on the success. But here's where it gets controversial: can this coffee giant sustain its momentum, or is this just a temporary caffeine rush?
On Wednesday, Starbucks unveiled its quarterly report, revealing a mixed bag of results. While the company’s 'Back to Starbucks' strategy has successfully driven foot traffic for the first time in two years, it’s also putting pressure on its bottom line. CEO Brian Niccol expressed optimism, stating, 'Our Q1 results show that our strategy is working, and we’re ahead of schedule. It’s exciting to see more customers choosing Starbucks more often—and this is just the start.'
And this is the part most people miss: Starbucks also reinstated its financial outlook for the first time since October 2024, projecting adjusted earnings per share between $2.15 and $2.40 for fiscal 2026. While this falls slightly below Wall Street’s expectations of $2.35 per share, the company anticipates global and U.S. same-store sales growth of at least 3%. This news sent shares soaring over 8% in premarket trading.
For the quarter ending December 28, Starbucks reported:
- Earnings per share: 56 cents adjusted (vs. 59 cents expected)
- Revenue: $9.92 billion (vs. $9.67 billion expected)
However, net income attributable to Starbucks dipped to $293.3 million, or 26 cents per share, down from $780.8 million, or 69 cents per share, the previous year. Higher coffee prices, tariffs, and turnaround costs weighed on margins. Excluding these factors, Starbucks earned 56 cents per share.
Net sales climbed 6% to $9.92 billion, fueled by the second consecutive quarter of same-store sales growth. Global same-store sales rose 4%, surpassing estimates of 2.3%, while traffic grew 3%—a significant milestone after two years of decline. U.S. same-store sales also jumped 4%, thanks to holiday favorites like the viral 'Bearista' cup and the peppermint mocha. Internationally, same-store sales increased 5%, with China leading the charge at 7% growth.
Speaking of China, Starbucks announced a joint venture with Boyu Capital to manage its operations there, expected to finalize in the second quarter of fiscal 2026. The company also opened 128 new locations during the quarter and plans to add 600 to 650 more in fiscal 2026, a bold move following the closure of 400 U.S. stores last year.
Here’s the bold question: Is Starbucks’ expansion strategy a recipe for long-term success, or is it spreading itself too thin? Investors are eagerly awaiting more details at Thursday’s investor day in New York City, where executives will unveil new long-term financial targets. What’s your take? Do you think Starbucks can keep up the pace, or is this growth too good to last? Let us know in the comments!
