TLDR
- Starbucks reported 4% U.S. same-store sales growth in Q1, the strongest performance since late 2023, driven by higher customer traffic
- Revenue jumped 6% to $9.9 billion, beating analyst expectations of $9.65 billion
- Profit dropped 62% to $293.3 million as investments in workforce and stores, plus coffee import tariffs, squeezed margins
- CEO Brian Niccol says turnaround efforts are ahead of schedule with cafe and drive-through orders now delivered in under four minutes on average
- Company projects 3% or greater global same-store sales growth for fiscal 2026 and plans to add 600-650 new locations
Starbucks posted revenue of $9.9 billion in its fiscal first quarter ended December 28, marking a 6% increase from the prior year. The figure topped Wall Street’s forecast of $9.65 billion.
The coffee chain reported 4% growth in U.S. same-store sales. This marks the strongest quarterly performance since late 2023 and the first U.S. sales increase in two years.
Customer traffic drove the growth. More people visited Starbucks locations to place orders during the quarter.
CEO Brian Niccol said the company’s turnaround strategies are working faster than expected. He pointed to improvements in customer frequency as a key metric.
“We have a plan. We have been working the plan, and the plan is working,” Niccol told investors.
Global same-store sales rose 4% in the quarter. International locations saw 5% growth in comparable sales.
The company’s holiday promotions pulled customers into stores. Starbucks launched seasonal beverages and ran its annual Red Cup Day promotion during the period.
A limited-edition “Bearista” cup release also sparked visits, according to Placer.ai data. Traffic growth slowed somewhat in December after the holiday rush.
Profit Drops Despite Sales Growth
Earnings told a different story. Net income fell 62% to $293.3 million in the quarter.
Adjusted earnings per share came in at 56 cents. This missed the analyst estimate of 59 cents and represented an 18.8% decline from 69 cents a year earlier.
Starbucks is spending heavily on its turnaround. The company invested hundreds of millions of dollars in workforce improvements and restaurant upgrades.
Coffee import tariffs added pressure to margins. These costs weighed on the bottom line despite higher sales.
Niccol acknowledged that growing sales won’t immediately translate to better profit. The company needs time for efficiency improvements to take hold.
Service Improvements and Expansion Plans
Starbucks delivered orders in under four minutes on average at U.S. company-operated stores. This met one of Niccol’s key targets for service speed.
Customer complaints have dropped as stores improve. Niccol said people are noticing the changes at cafes.
The company plans to open 600 to 650 new locations globally in fiscal 2026. These will include both company-operated and licensed stores.
Starbucks is rolling out more energy drinks and afternoon food options. The chain wants to capture business outside traditional morning hours.
The company recently sold a majority stake in its China operations to a Chinese private-equity firm. It also closed hundreds of U.S. locations and cut corporate positions.
For fiscal 2026, Starbucks expects at least 3% growth in global and U.S. comparable store sales. The company projects adjusted earnings per share between $2.15 and $2.40.
Wall Street analysts rate the stock a Moderate Buy with an average price target of $98.05. Starbucks shares rose about 4% in morning trading after the earnings release and were up 13.67% year-to-date.
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