tapebrief
SBUX · Q4 2025

SBUX · Q1 2026 Earnings

Bullish

Starbucks

Reported January 28, 2026

30-second summary

30-second take: Revenue grew 5.5% YoY to $9.92B with global comps +4% (transactions +3%, ticket +1%) — the cleanest print of Niccol's tenure and a decisive acceleration from Q4's +1% comp. U.S. transactions turned positive for the first time in eight quarters, China comps jumped to +7% (transactions +5%), and management announced a Boyu joint venture taking 60% of China retail while Starbucks retains 40%. Critically, after two quarters of guidance silence, FY2026 was framed numerically: non-GAAP EPS $2.15–$2.40, global/U.S. comps 3%+, slight non-GAAP operating margin expansion, and 600–650 net new stores. The on-record turnaround thesis now has data behind it.

Headline numbers

EPS

Q1 FY2026

$0.56

Revenue

Q1 FY2026

$9.91B

+5.5% YoY

Gross margin

Q1 FY2026

67.0%

Free cash flow

Q1 FY2026

$1.27B

Operating margin

Q1 FY2026

9.0%

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$9.91B+5.5%$9.57B+3.6%
EPS$0.56—$0.52+7.7%
Gross margin67.0%———
Operating margin9.0%—2.9%+610bps
Free cash flow$1.27B———

Guidance

Starbucks issued comprehensive FY2026 guidance for the first time this quarter with non-GAAP EPS of $2.15–$2.40, global comp sales of 3%+ and similar revenue growth, slight operating margin expansion, and 600–650 net new stores.

Guidance is issued for both next quarter and the full year. Both may appear below.

New guidance

MetricPeriodGuideYoY
Non-GAAP EPSFY2026$2.15 to $2.40—
Global comparable store sales growthFY20263% or greater—
U.S. comparable store sales growthFY20263% or greater—
Consolidated net revenue growthFY2026similar rate to global comp growth—
Non-GAAP consolidated operating marginFY2026slightly improve year over year—
Net new coffeehousesFY2026600 to 650 globally—

Segment performance

Q1 FY2026
SegmentQ1 FY2026YoY
North America$7.281B+2.9%
International$2.065B+10.3%
Channel Development$0.523B+19.8%

Platform metrics

Q1 FY2026
SegmentQ1 FY2026
Global Comparable Store Sales Growth4%
U.S. Comparable Store Sales Growth4%
Comparable Transactions Growth3%
Average Ticket Growth1%
China Comparable Store Sales Growth7%
China Comparable Transactions Growth5%
Total Stores41,118

Profitability

Q1 FY2026
SegmentQ1 FY2026
Non-GAAP Operating Margin10.1%

Management tone

Defensive turnaround → operational fix in flight → "the plan is working" → quantified plan with the China structure now defined.

For three quarters Niccol has been building toward a moment where the data could carry the narrative. This quarter he got it: "First, turn around the top line and then earnings growth will follow. And I am delighted to say we are now achieving top line growth driven by transactions." The shift from declarative confidence ("the plan is working" in Q4) to evidentiary confidence (transactions positive across rewards and non-rewards customers, eight-quarter inflection confirmed) is the single most important tonal move in the company's communications since the 2024 management change. The Q4 framing was "trust us"; the Q1 framing is "here is the proof."

The earnings recovery framing has hardened from "earnings will lag revenue" to a specific path with named owners. In prior quarters, cost-program questions would have been deferred to "details to come"; this quarter, in response to Brian Harbor's question on the $2 billion cost program, Niccol committed to "a list of projects with people's names next to it, clear deliverables" unfolding over two years from G&A, procurement, and technology. The same management team that earlier framed China financing as not the constraint is now executing a 60/40 structure with Boyu and using proceeds for debt reduction. This is the operational discipline pattern that was absent under prior management.

China has moved from optionality to structure. Prior commentary framed China as open to partnership with a meaningful retained stake; this quarter the structure is defined: Boyu acquires up to 60%, Starbucks retains 40% with equity-method income recognition, transaction proceeds to debt reduction subject to regulatory approval. Combined with +7% comps the quarter the announcement landed, the China narrative has fully reset.

Hedging language remains deliberately present. "While market dynamics can change, we continue to expect coffee prices and tariff pressures to peak in Q2" and "path forward not linear" — paired with an FY EPS range whose width signals management is still buying optionality on the margin trajectory. The disconnect between Q1's 10.1% non-GAAP margin and a "slight improvement" FY guide is the most important framing in the deck for H2 modeling. Niccol is not declaring victory on the P&L; he is declaring victory on traffic.

The "we have a plan, we have been working the plan, and the plan is working" line is structurally identical to the Q4 opener, but now anchored to transaction growth across every cut — rewards, non-rewards, U.S., China — rather than a single segment inflection.

Recurring themes management leaned on this quarter:

Transaction growth resumption after eight quarters of declineGreen Apron service standard driving operational improvementsChina partnership restructuring and white space expansionTop-line growth leading earnings recovery trajectorySupply chain and menu optimization opportunitiesTechnology enablement (Green Dot Assist, new CTO hire)

Risks management surfaced:

Strategic investments taking time to flow through to sustainable earnings growthPath forward not linearProduct and distribution cost inflation from tariffs and elevated coffee pricingOngoing weakness in grocery and retail licensed channelsRegulatory approval required for China JV closingMarket dynamics could change tariff and coffee price expectations

Q&A highlights

Brian Harbor · Morgan Stanley

What are the specific cost reduction opportunities and their timing? Can you elaborate on the $2 billion cost reduction plan mentioned?

Management confirmed a clear plan to track down $2 billion in costs starting in 2025 and unfolding over the next two years. Savings will come from G&A, procurement, and technology-driven efficiencies. The plan comprises multiple projects with named owners and clear deliverables, not dependent on single initiatives.

$2 billion cost reduction target over next two yearsProgram starting in 2025Multiple projects with named owners and clear deliverablesOpportunities in G&A, procurement, and technology efficiency

Jeffrey Bernstein · Barclays

Can you discuss unit growth reacceleration in the U.S. and the long-term opportunity, including penetration analysis and return analysis for doubling store counts?

Management identified thousands of potential unit growth sites with no barriers to expansion. Key enablers are correct unit format (Ristretto, Tall, Grande, and Pico versions) and people capability (coffeehouse coaches/assistant store managers creating pipeline). Detailed plans will be shared at investor day tomorrow.

Thousands of identified unit growth opportunities in U.S. and internationallyNew unit formats: Ristretto (multiple sizes), Tall, Grande, Pico versionsCoffeehouse coaches program creating assistant store manager pipelinePreviously mentioned goal to double long-term store counts

David Palmer · Evercore ISI

What elements should analysts appreciate about fiscal 26 earnings guidance, and what scenarios drive guidance to high versus low end?

Higher end driven by maintaining comp performance supported by green apron service execution, marketing, and menu innovation. Lower end driven by comp deceleration or inability to maintain execution. Comp momentum is the primary driver with cost discipline supporting. Detailed comp drivers (digital, rewards, menu) to be discussed at investor day.

Comp performance is primary driver of earnings guidance rangeGreen apron service model execution criticalMarketing and menu innovation are key comp driversDigital, rewards, and menu innovations to drive future comps

Lauren Silverman · Deutsche Bank

Why are non-rewards members outpacing rewards member growth, and what are opportunities to narrow the gap?

Non-rewards growth reflects broad marketing appeal and cultural relevance driving infrequent customers. Rewards base grew to 35 million+ through better engagement and personalization without discounting. Management emphasized both segments are equally valuable and will continue investing in both marketing (for non-rewards) and rewards personalization (for rewards engagement and frequency).

Rewards membership surpassed 35 millionNon-rewards growth driven by broad marketing and cultural relevanceRewards growth through better engagement and personalization, not discountingBoth customer segments seeing increased transaction frequency

John Ivanko · JPMorgan Chase

How will Starbucks differentiate AM versus PM day-part execution, and how does it address competitive threats from drive-through and take-out focused competitors?

Morning is a ritual (habit-driven), afternoon is a reset (flexibility for energy, sparkling, blended, protein drinks). Digital menu boards will enable day-parting and afternoon innovation pipeline. Competitive advantage through integrated ecosystem (cafe, drive-through, mobile order) executed with excellence. Store pipeline being rebuilt with coffeehouse coaches and optimized formats.

Digital menu boards rolling out across entire systemAfternoon offerings: customized energy, sparkling energy, indulgent drinks (Frappuccinos), complementary foodMorning focused on ritual/habit, afternoon on resetIntegrated ecosystem: cafe + drive-through + mobile order pickup as competitive moat

Answers to last quarter's watch list

Does Q1 FY2026 North America comp turn positive on the print, not just intra-quarter? Yes, decisively. U.S. comps came in at +4% with transactions +3% (the first positive U.S. transaction comp in eight quarters per management), well above the implied "modest positive" expectation from Q4 commentary. Both rewards and non-rewards transactions grew, with non-rewards growing faster. Status: Resolved positively
What numerical framework arrives at the late-January investor day? Comprehensive: non-GAAP EPS $2.15–$2.40, global/U.S. comps 3%+, slight non-GAAP operating margin expansion, 600–650 net new stores, and a named $2B two-year cost program. After two quarters of qualitative-only commentary this is a full reset of the disclosure framework. Status: Resolved positively
China partnership structure and economics. Defined: Boyu acquires up to 60% of China retail operations, Starbucks retains 40% via equity-method JV. Subject to regulatory approval, with closing expected in spring. Transaction proceeds earmarked for debt reduction. No partner-specific upfront payment or governance economics disclosed in the press release. Status: Resolved positively (structure confirmed; granular economics still to come)
FY2026 margin trajectory commentary. Management guided non-GAAP operating margin to "slightly improve" YoY, with improvements driven by the back half as Green Apron labor annualizes in Q4, the $2B cost program ramps, coffee and tariff pressures abate, and sales leverage builds. Q1 came in at 10.1% (-180bps YoY), meaning H2 will need to outperform to deliver on guidance. Status: Resolved with caveats — trajectory disclosed but H2 ramp is the key dependency
Protein platform and matcha reformulation traction. Niccol disclosed that the protein platform launched in early Q1 saw renewed engagement in January, with awareness still low but trial-to-repeat rates strong and proving highly incremental. The cold foam protein attach is a notable secondary driver. Status: Resolved positively — qualitative traction confirmed, no quantification
Store count direction. Reversed: total stores grew to 41,118, +128 QoQ, with FY2026 guidance of 600–650 net new globally returning the company to unit growth. Status: Resolved positively

What to watch into next quarter

Does U.S. comp growth sustain at or above 3% in Q2 as Green Apron labor annualizes? Q1's +4% comp was the strongest print of the Niccol era; the FY guide of 3%+ implies management expects modest deceleration. Anything below +3% in Q2 would call into question the durability framing and the FY EPS high end. Note that ~0.5pt of Q1's comp came from sales-transfer benefit — the underlying run-rate is closer to +3.5%.

Does H2 non-GAAP operating margin expand enough to deliver "slight improvement" YoY? Q1 came in at 10.1%, contracting 180bps YoY. The FY guide requires H2 margin to outperform meaningfully as Green Apron labor anniversaries in Q4, coffee/tariff pressures abate, and $2B cost program flows. Watch whether Q2 margin holds versus the implied seasonal trough — and whether management quantifies the $2B cost program's H2 contribution.

Boyu China JV regulatory approval timing and consolidation impact. Subject to Chinese regulatory approval, with closing expected spring 2026. Watch for closing date confirmation, the consolidation-to-equity-method accounting transition, and whether transaction proceeds materialize at the disclosed scope. The mid-year mechanics will affect every FY2026 revenue comparable.

Coffee and tariff cost pressure peak timing. Management said costs continue to expect to peak in Q2. Watch for Q2 gross margin and any commentary on H2 cost relief — directly affecting whether the FY EPS guide skews toward $2.15 or $2.40.

Rewards membership growth and non-rewards conversion. Rewards crossed 35.5M this quarter with non-rewards transactions growing faster than rewards. Watch whether this gap narrows (signaling rewards re-engagement) or widens (signaling a structural shift away from the discount-driven acquisition model) and whether management discloses rewards revenue mix at the investor day.

Channel Development momentum. +19.8% YoY revenue growth. Watch whether this segment sustains above 15% growth and whether management discloses any margin or product mix detail — it remains under-covered in management commentary relative to its growth contribution.

650-pilot-store outperformance durability. With pilot stores running 200bps ahead of the fleet on comp, watch whether system-wide rollout of the Green Apron model closes that gap (signaling broad replication) or whether pilot outperformance persists (suggesting execution constraints in the broader fleet).

Sources

  1. Starbucks Q1 FY2026 press release / 8-K Exhibit 99.1, filed January 28, 2026 — https://www.sec.gov/Archives/edgar/data/829224/000082922426000010/sbux-12282025xearningsrele.htm
  2. Starbucks Q1 FY2026 earnings conference call transcript, January 28, 2026
  3. Starbucks Q4 FY2025 press release / 8-K Exhibit 99.1, filed October 29, 2025 (for prior-period comparison)

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