Starbucks tops Q4 profit estimates, misses on revenue

Starbucks Corporation (SBUX) said on Oct. 29 in a press release that fourth-quarter non-GAAP earnings topped estimates while revenue fell short.

Shares fell 1.8% in after-hours trading as of 4:13 p.m. ET, from a regular-session close of $105.59.

The company reported results for the 13 weeks ended Sept. 27, 2026. Here's how the company did:

• Non-GAAP EPS: 80 cents per share vs. 52 cents a year earlier, against 73 cents expected, according to Finnhub
• GAAP EPS: 59 cents per share vs. 12 cents a year earlier
• Revenue: $9.14 billion vs. $9.57 billion a year earlier, against $9.42 billion expected, according to Finnhub

Global comparable coffeehouse sales rose 7.2%, driven by a 5.2% increase in average ticket and a 1.8% increase in comparable transactions.

Consolidated net revenues decreased 4% to $9.1 billion, primarily because the company converted its Starbucks retail operations in China to a licensed joint venture model.

Non-GAAP operating margin expanded 460 basis points year-over-year to 14.0%. GAAP operating margin rose 790 basis points to 10.8%, primarily driven by lower restructuring costs and sales leverage.

Restructuring and impairments totaled $272.8 million in the quarter, down from $755.0 million a year earlier.

For fiscal 2026, consolidated net revenues rose 2% to $37.9 billion. Non-GAAP EPS of $2.72 increased 28% over the prior year.

The year included the divestiture of Starbucks retail operations in China in the third quarter, which produced a pre-tax gain of $536.3 million, the company said.

Chairman and CEO Brian Niccol said the quarter and year reflected the company's focus on fundamentals. He added: "Back to Starbucks started as our turnaround plan. Now, it's our growth plan."

Segment results

North America net revenues rose 6% to $7.3 billion, and operating margin reached 12.3%, up from 4.5% a year earlier.

International net revenues fell 37% to $1.3 billion, primarily reflecting the China conversion. Its operating margin rose to 19.7% from 10.8%, and its comparable coffeehouse sales increased 0.9%.

Channel Development net revenues decreased 9% to $494.4 million, primarily due to lower revenue in the Global Coffee Alliance. Its operating margin was 53.5%.

Fiscal 2027 guidance

The company introduced fiscal 2027 guidance for a 53-week year, instead of the usual 52 weeks. The extra week will be reflected in the fourth quarter of fiscal 2027.

It expects consolidated net revenues to decline about 1%, including about $700 million from the 53rd week. Non-GAAP EPS is expected to be $3.15 to $3.25, including slightly more than 10 cents from the extra week.

The company also expects North America comparable coffeehouse sales growth of about 4.0%, a non-GAAP consolidated operating margin of 13.5% to 14.0%, and about 1,200 net new coffeehouses globally.

Chief Financial Officer Cathy Smith said: "In fiscal 2026, we returned to comp growth, expanded margin and delivered stronger earnings, and we intend to build on that progress in fiscal 2027."

Closures, dividend and buybacks

In September, the company closed about 250 company-operated North America coffeehouses that did not deliver the experience and financial performance expected of the brand, under its Back to Starbucks strategy.

The board declared a cash dividend of 63 cents per share, up from 62 cents a year earlier. It is payable Nov. 27, 2026, to shareholders of record on Nov. 13.

The company said it plans to resume share repurchases in fiscal 2027.

According to its SEC filings, net income has risen in each of the last three quarters, from $133.2 million in the fourth quarter of fiscal 2025 to $1.05 billion in the third quarter of fiscal 2026.