Starbucks Reports First Same-Store Sales Growth in Nearly Two Years
Starbucks announced a 1% increase in global same-store sales for its fiscal fourth quarter ended September 28, marking a significant turnaround after almost two years of declining comparable sales. This growth was largely driven by strong international performance, particularly in China, while U.S. same-store sales remained flat for the quarter but showed positive momentum in September. Wall Street had anticipated a 0.3% decline globally and a 0.9% drop in the U.S., making Starbucks’ results a notable beat against expectations.
“Critical moment for our company, we’re really proud of where we are,” said CEO Brian Niccol during an interview on CNBC’s “Squawk on the Street.” He emphasized that the positive U.S. sales trend has continued into October.
Quarterly Financial Highlights and Restructuring Impact
Starbucks reported adjusted earnings per share of 52 cents, slightly below analysts’ expectations of 56 cents. Revenue reached $9.57 billion, surpassing forecasts of $9.35 billion. Despite revenue growth of 5%, net income attributable to Starbucks declined sharply to $133.1 million, or 12 cents per share, from $909.3 million a year prior. The decline in net income was influenced by restructuring expenses, litigation settlements, and other one-time charges. As part of its turnaround plan, Starbucks closed 627 locations and laid off approximately 900 nonretail employees. CFO Cathy Smith cautioned investors about the unpredictability of the recovery process, noting that while momentum is encouraging, sales turnarounds are rarely linear.
Operational Improvements Driving Customer Return
Starbucks has prioritized enhancing the in-store experience and reducing service times, aiming to complete orders in under four minutes. Currently, over 80% of company-operated stores in North America meet this target, even amid increased customer traffic following the launch of the fall menu. The company has shifted its marketing focus from promotions and limited-time offers to emphasizing core coffee quality and innovative products, such as protein-packed cold foam beverages. This strategy has contributed to a 1% increase in 90-day active Starbucks Rewards members both quarter-over-quarter and year-over-year.
International Markets Bolster Sales, China Remains Key Focus
Outside the U.S., Starbucks achieved a 3% increase in same-store sales, driven by a 6% rise in customer traffic. China, the company’s second-largest market, posted a 2% sales increase alongside a 9% traffic boost. To counter competition from local beverage brands, Starbucks has reduced prices on many iced drinks to regain market share. Starbucks is also considering strategic options for its China business, including the potential sale of a stake. CEO Niccol highlighted strong interest from high-quality partners and reaffirmed confidence in the region’s long-term growth prospects, expecting to maintain a meaningful ownership position.
Outlook and Investor Guidance
The company suspended its annual forecast a year ago and does not plan to provide updated near- or long-term guidance until its investor day scheduled for late January 2026. Shares of Starbucks declined more than 1% in early trading following the earnings release.
FinOracleAI — Market View
Starbucks’ first positive same-store sales growth in nearly two years signals early success of its turnaround strategy, particularly with international markets and operational improvements driving customer engagement. While earnings were impacted by restructuring costs and labor investments, the company’s renewed focus on customer experience and product innovation lays a foundation for sustainable growth.
- Opportunities: Continued momentum in U.S. sales, expansion in China with strategic partnerships, and enhanced customer loyalty through Starbucks Rewards.
- Risks: Uncertainty in recovery trajectory, competitive pressures in key markets, and margin compression from increased labor costs.
- Strategic Focus: Streamlining operations, investing in labor to improve service speed, and leveraging brand strength in premium coffee innovation.
Impact: Starbucks’ reported sales growth and operational improvements present a cautiously positive outlook for the company’s turnaround, with strategic execution in international markets and U.S. store experience key to sustaining momentum.
