Starbucks Earnings: Will Brian Niccol’s $500M Gamble Live Up to the Hype on Oct 29?
Brian Niccol just declared Starbucks's turnaround complete, but 250 more store closures, a $500 million labor bet, and fading tariff tailwinds put that claim to the test when earnings drop October 29.
Starbucks (NASDAQ:SBUX | SBUX Price Prediction) reports fiscal fourth-quarter results Thursday, October 29, after the close. Shares are up 21.89% this year. Now Brian Niccol has to show his turnaround can handle new store closings while the tariff boost fades.
Strong Momentum Meets a Second Round of Closures
Last quarter was the clearest of Niccol’s tenure. Non-GAAP EPS of $0.85 beat the $0.65 consensus by 30.79%. Global comparable sales rose 7.9% on 4.2% transaction growth. Non-GAAP operating margin expanded 430 basis points to 14.4%, helped by IEEPA tariff refunds, and management raised full-year EPS guidance to $2.55 to $2.65.
The picture has changed since then. Starbucks said it would close approximately 250 North American coffeehouses. It was the second round of North American closures under Niccol, and it came with restructuring charges and a lower fiscal 2026 net new store outlook. In October, the board raised the quarterly dividend to $0.63 from $0.62. Niccol has also declared the core two-year turnaround complete.
Consensus Calls for Earnings Growth on Lower Revenue
| Metric | Consensus | Prior Year | YoY Growth |
|---|---|---|---|
| Q4 Normalized EPS | $0.7058 | $0.52 | 35.73% |
| Q4 Revenue | $9.23 billion | $9.57 billion | -3.58% |
| FY2026 EPS | $2.608 | $2.13 | 22.44% |
| FY2026 Revenue | $38.00 billion | $37.18 billion | 2.20% |
The lower revenue comes from moving China retail into a licensed joint venture with Boyu Capital, a deal that closed in April 2026.
U.S. Comps and Margins After Tariff Refunds Will Decide This Quarter
Turning first to U.S. comparable sales. Management guided for 6.5% or better in the fourth quarter and noted harder traffic comparisons and an uneven consumer. On Polymarket, traders price 7% to 9% global comp growth as the most likely outcome, at a 0.445 probability.
Margins carry more weight. Chief financial officer Cathy Smith said margins expanded “even without the impact of tariff refunds,” and Starbucks has largely collected those refunds already. That makes labor the swing factor. Starbucks has spent $500M+ on bigger staffing levels and more labor hours. You should look at whether that spending keeps driving transactions while the full-year margin reaches 11%.
I’m also watching renovations. Starbucks targets at least 1,500 uplifts by fiscal year-end at about $150,000 each and plans to speed up in fiscal 2027. Capital spending guidance will show how hard management intends to push. The tax rate should also return to the mid-20s, up from last quarter’s 21.8%.
Fiscal 2027 Guidance Will Test the Turnaround-Complete Claim
Recent beats have faded quickly. The fiscal second-quarter beat produced an 8.45% earnings-day gain, and the stock then slid 8.52% over the next 30 days. At about 62 times earnings, Starbucks needs a fiscal 2027 outlook showing that comps, closings, and renovation spending add up to lasting margin expansion. If the turnaround really is complete, this report is where the numbers start proving it.
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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, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
