Starbucks is Back to Growth After Strong Q1 Performance
Starbucks (NASDAQ:SBUX | SBUX Price Prediction) reported Q2 FY2026 results after the close on April 28, and investors loved what they saw. The coffee giant beat on both lines, raised full-year guidance, and called the quarter the official turn in…
Starbucks (NASDAQ:SBUX | SBUX Price Prediction) reported Q2 FY2026 results after the close on April 28, and investors loved what they saw. The coffee giant beat on both lines, raised full-year guidance, and called the quarter the official turn in CEO Brian Niccol’s turnaround. Shares responded in kind, climbing 8.68% the next session to $105.72.
‘Back to Starbucks’ Finally Shows Up in the Numbers
The headline story is traffic. Global comparable store sales rose 6.2%, well ahead of expectations, with North America comps up 7.1% on 4.4% transaction growth. After several quarters of falling visits, customers are walking back through the door. That is the cleanest possible signal that the operational fixes (faster service, better staffing, reimagined Rewards tiers) are working.
Channel Development was the other standout, with revenue up 38.8% on Global Coffee Alliance momentum with Nestlé. I liked the breadth here. Growth was not leaning on any single lever.
China and North America Margins Need Watching
China comps came in at just 0.5%, with ticket down 1.6%, a reminder that the new Boyu Capital joint venture (Boyu 60%, Starbucks 40%) is addressing structure first, with demand still to follow. Closer to home, North America operating margin contracted 170 basis points on labor investments, mix, tariffs, and elevated coffee pricing. If you are tracking the recovery, that is the line to watch next quarter.
Margins Lead, Guidance Follows
Key Figures
- Adjusted EPS: $0.50 vs. $0.44 expected (13.64% beat)
- Revenue: $9.53B vs. $9.23B expected, up 8.79% YoY
- Operating income: $828.1M, up 37.79%
- Net income: $510.9M, up 32.98%
- Operating margin: 9.4%, up 110 bps
- International operating margin: 19.4%, from 11.6% (China held-for-sale depreciation cessation)
Management raised FY2026 guidance across the board: global and U.S. comp sales of 5.0% or greater (from 3%+) and non-GAAP EPS of $2.25 to $2.45. Per the custom brief, at least 12 analysts raised price targets following the report.
Niccol Calls the Turn
CEO Brian Niccol said “Our second quarter marked the turn in our turnaround as our Back to Starbucks plan drove both top and bottom line growth.” He added that “This is the Starbucks our customers deserve.” The tone was confident, and the raised outlook backed it up.
Can the Comp Momentum Hold?
The bar moves up from here. With shares now near the 52-week high of $104.15 and trading at a rich forward P/E of 43, execution has to keep pace. I would keep an eye on whether North America margins stabilize next quarter and whether China shows any signs of life under the new Boyu structure. The turnaround story is real. Now it has to compound.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, and Money Morning. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
