Starbucks NASDAQ: SBUX reported what executives called a key inflection point in its turnaround effort, delivering year-over-year growth in both revenue and earnings for the first time in more than two years during its fiscal second quarter of 2026. On the company’s earnings call, Chairman and CEO Brian Niccol said the quarter “marked a milestone for the business,” driven by accelerating comparable sales, improving operating margin, and continued momentum into April.
Quarterly performance and raised fiscal 2026 outlook
Consolidated revenue for the quarter was $9.5 billion, up 8% year-over-year, with global comparable store sales up 6.2%, executives said. Consolidated operating margin improved to 9.4%, up about 110 basis points versus the prior year. Starbucks reported earnings per share of $0.50, up about 22% year-over-year, which CFO Cathy Smith said was the company’s first quarter of EPS growth in more than two years.
Based on the quarter and what Niccol described as continued positive trends in April, Starbucks raised its fiscal 2026 guidance. Niccol said the company increased its outlook for global comparable sales growth to 5% or better and raised EPS guidance to $2.25 to $2.45. Smith added that the company is trying to remain prudent given “heightened uncertainty” in the macro environment, despite citing resilient demand trends.
U.S. strength led by transaction growth and delivery
Management highlighted the U.S. business as a key driver of the results. Niccol said North America and U.S. comparable sales accelerated to more than 7%, driven by more than 4 percentage points of transaction growth—strength he said Starbucks has not seen in three years. Smith similarly noted U.S. comp growth of 7.1%, with transactions up more than 4% and average ticket up nearly 3%.
Executives attributed ticket growth to multiple factors, including the growing delivery business, beverage mix, an “artisanal bakery launch” that increased food attach, and the popularity of modifications led by the company’s cold foam platform. Smith said cold foam platform sales rose more than 40% in the quarter across the U.S. company-operated business.
Delivery also contributed to results. Niccol said Starbucks expanded delivery access across its U.S. company-operated portfolio last fiscal year, and that it has proven “largely incremental,” growing more than 30% year-to-date across the U.S. company-operated business.
On consumer behavior, Niccol said Starbucks saw “broad-based spend growth across all income levels and age demographics.” Asked specifically about lower-income customers, he said customers respond when the company delivers a differentiated experience that feels “worth it,” whether viewed as a ritual or as a “splurge.”
Operational execution: Green Apron service, speed metrics, and store “uplifts”
Niccol emphasized execution under the company’s “Back to Starbucks Strategy,” pointing to staffing, scheduling, technology, and leadership improvements tied to the Green Apron service model. He said customer experience scores continued to rise and service times remained on target despite higher transaction volumes.
In Q&A, Niccol reiterated Starbucks’ service time targets: “four-four-twelve”—four minutes in-cafe, four minutes in the drive-thru, and better than 12 minutes for mobile order pickup promise times. He said about 80% of stores or better are hitting those metrics, and that scheduled ordering—planned for rollout in May—should improve mobile order predictability.
Niccol also discussed Starbucks’ GROW program, a simplified coffeehouse reporting and ranking system. He said the share of U.S. company-operated coffeehouses delivering “4 or more shots” increased more than 30 percentage points since the program launched in October, but added there remains runway, as “close to 40%” of stores are still below four shots.
Beyond operations, Starbucks is investing in the in-store “third place” experience through store refresh projects, which executives called “uplifts.” Niccol said more than 300 uplifts have been completed “on budget and with zero closure days,” and the company expects to exceed 1,000 uplifts completed in its top 20 markets by fiscal year-end. He said the company sees upside in both morning and afternoon dayparts after uplifts occur.
Starbucks also announced partner-focused changes. Niccol said the company will shift to weekly pay and introduce a new quarterly reward program for baristas and shift supervisors, aimed at recognizing teams for performance across sales, operations, and customer service.
Menu innovation, marketing, and Starbucks Rewards engagement
Leadership repeatedly pointed to product innovation and marketing as demand drivers. Niccol highlighted new bakery items, premium matcha beverages, and the company’s “1971 Dark Roast coffee.” He also said new energy Refreshers and a new mango flavor launched in April exceeded expectations and expanded what he described as a $2 billion Refresher platform. Both Niccol and Smith discussed “customizable energy” options that allow customers to adjust caffeine levels.
Marketing initiatives included Starbucks’ presence around “major music moments like Coachella,” “global stages like the Winter Olympics,” and “tech platforms like ChatGPT,” Niccol said, framing the effort as a return to culture and brand momentum.
Starbucks Rewards metrics were another focal point. Niccol said U.S. 90-day active Rewards membership reached a record 35.6 million, and Smith said membership was up 4% year-over-year. Executives highlighted early traction from program changes rolled out in March, including a 60-star redemption option that Niccol said accounts for about a third of all redemptions. Smith also said both the rate and volume of U.S. card loads have grown steadily since launch, exceeding expectations.
International results and China transaction impact
International segment net revenues were $2.1 billion, up nearly 8% year-over-year, and international comparable sales rose 2.6%, led by transaction growth of more than 2%, Smith said. Management noted that all 10 of Starbucks’ largest international markets posted positive comps for the first time in nine quarters.
China results were discussed in the context of a transaction that closed shortly after quarter end. Smith said Starbucks China delivered comparable sales up 50 basis points on transaction growth of more than 2% in the quarter, and Niccol said it marked the fourth consecutive quarter of transaction-led comp growth. However, Smith said that beginning in Q3 the retail operations of Starbucks China will be deconsolidated and reported as part of the broader licensed portfolio, and that the company will cease quarterly reporting of China standalone revenue and comps.
Smith said the transaction’s overall value to Starbucks is anticipated to be more than $13 billion, including the net present value of licensing economics, and that Starbucks received approximately $3.1 billion in gross cash proceeds before taxes. She said Starbucks repaid $1 billion of February maturities prior to closing and expects to use remaining proceeds for additional debt reduction and balance sheet management.
China-related accounting also affected Q2 profitability. Smith said about half of the international segment’s roughly 790 basis point margin expansion (to 20.3%) was driven by held-for-sale accounting related to Starbucks China, which temporarily reduced store operating expenses and depreciation and amortization by approximately $118 million. She said that dynamic concluded at the start of Q3 with the transaction close.
Looking ahead, Smith said the China joint venture licensing structure is assumed in guidance and is expected to be margin accretive, with “roughly half of its revenues flowing to operating income.” She also said that in the back half of fiscal 2026, China-related revenues are expected to be less than 20% of what would have been reported when China was company-operated, leading Starbucks to expect consolidated fiscal 2026 net revenues to be “roughly flat” year-over-year.
On costs, Smith cited product and distribution pressures in North America, including inflation “largely related to tariffs and elevated coffee prices.” She said Starbucks expects these pressures to moderate in the back half of fiscal 2026, noting that results typically lag the market due to coffee purchasing and hedging practices.
Starbucks reaffirmed progress on its $2 billion cost savings plan through fiscal 2028 and maintained its fiscal 2026 net new store forecast of 600 to 650 coffeehouses, including 450 to 500 net new international openings and 150 to 175 net new U.S. company-operated stores, Smith said.
About Starbucks NASDAQ: SBUX
Starbucks Corporation is a global coffeehouse chain and roaster that operates, licenses and franchises coffee shops and related retail businesses. Founded in Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker, the company grew from a single store focused on whole-bean coffee and equipment into a broad consumer-facing brand. Howard Schultz, who joined the company later and served in senior leadership roles, is widely credited with transforming Starbucks into a mass-market specialty coffee retailer and expanding its footprint internationally.
Starbucks' core activities center on the retail sale of hot and cold specialty beverages, whole-bean and packaged coffees, teas and ready-to-drink products, along with complementary food items and merchandise such as mugs and brewing equipment.
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