Starbucks (SBUX) delivered a solid fiscal second quarter, showing clear signs that its “Back to Starbucks” turnaround plan is taking hold. Following the release, SBUX stock was up about 6% in the after-hours trading session.
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The company reported 9% revenue growth to $9.5 billion and stronger margins, with CEO Brian Niccol calling the period “the turn in our turnaround,” according to the earnings release. The top line also beat analysts’ expectations of $9.17 billion. Also, it reported adjusted earnings per share of $0.50, which surpassed Wall Street’s estimate of $0.42. Starbucks’ adjusted EPS was also up 22% year-over-year from $0.41.
Global comparable sales rose 6.2%, driven by higher traffic and modest ticket growth. Importantly, North America remained the engine of the business, with comps up 7.1%, including a 4.4% increase in transactions. The U.S. matched that performance, also posting 7.1% comp growth.
Further, the Channel Development segment, which includes the Global Coffee Alliance, posted 39% revenue growth to $567.8 million. Operating income rose to $229.9 million, though margins tightened due to lower joint‑venture income and product mix changes.
International Profit Jumps as China Restructuring Lowers Costs
International results were a standout. Revenue climbed 10%, while operating income surged 84% to $398.6 million. Operating margin expanded sharply to 19.4%, with support from lower depreciation and operating costs after Starbucks classified its China retail assets as held for sale.
Comparable sales in the region rose 2.6%, with China up 0.5%, driven by higher transactions but offset by a decline in average ticket.
Fiscal 2026 Guidance
For Fiscal 2026, Starbucks expects:
- Global and U.S. comparable store sales growth of over 5%, compared with 3% previously
- Flat consolidated revenue year-over-year
- Slight improvement in adjusted operating margin
- Adjusted EPS between $2.25 and $2.45, up from the prior range of $2.15 to $2.40 per share
- 600-650 net new stores globally
CFO Cathy Smith said the quarter showed the early payoff of the company’s strategy. “We’re pleased to see the combination of our comp growth and cost discipline starting to show up in margins,” she added.
Is Starbucks Stock a Buy, Sell, or Hold?
Currently, Wall Street has a Moderate Buy consensus rating on Starbucks stock based on 14 Buys, 12 Holds, and two Sells. The average SBUX stock price target of $103.58 indicates 6% upside potential.
