Starbucks (SBUX) Q4 FY2026 Earnings: North America Margin Up 440 bps

Starbucks (SBUX) reported Q4 fiscal 2026 earnings on October 29, 2026, through its earnings release and conference call, covering the quarter ended September 27. Operating margin, comparable sales and earnings per share all came in above the company's earlier guidance [1][2][3]. Three questions framed the quarter: whether U.S. comparable sales could reach 6.5% or more on the back of more customer visits, whether margins could keep expanding once tariff refunds disappeared and store labor investments began to be lapped, and whether the International segment could hold an operating margin of about 19% after China moved to a licensed joint venture. The margin question was answered most clearly, with North America sales leverage as the main driver. U.S. comparable sales beat guidance, but average ticket became the larger contributor. International margin was in line, while comparable sales in the remaining company-operated markets were weak [1][2]. Taken together, the profit recovery no longer depends on one-time items, but more of the margin gain in fiscal 2027 is expected to come from the savings program and lower coffee prices.

Starbucks operates coffeehouses worldwide. In fiscal 2025, North America, International and Channel Development accounted for 74%, 21% and 5% of revenue, respectively [4]. North America is mainly company-operated, and customers buy beverages and food in stores, at drive-thrus, through mobile orders and via delivery. After the China transaction, International is mainly a licensed business. Store labor and rent, and product costs such as coffee, are the two largest cost items.

Margin expanded again without tariff refunds

Consolidated non-GAAP operating margin was 14.0% in the fourth quarter, up 460 basis points from a year earlier [1]. This measure excludes $285.1 million of restructuring and related items, mainly tied to the roughly 250 North America company-operated coffeehouses closed in September, in line with the plan the company announced that month [1][5]. Full-year non-GAAP operating margin was 11.9%, above the guidance of "greater than 11.0%" [1][3].

The fourth-quarter expansion did not rely on one-time items. In the third quarter, lower inflation paired with tariff refunds added about 110 basis points to North America margin, while labor investments subtracted about 190 basis points [6]. Management said the Green Apron Service labor investments were lapped in August, coffee price impacts were roughly neutral in the quarter, and it did not cite tariff refunds. North America operating margin excluding restructuring was approximately 16%, up 440 basis points [2].

Most of the North America improvement came from sales growth spreading fixed store costs over more revenue. The chief financial officer said sales leverage from the 7.7% U.S. comp was the biggest driver, followed by lapping the labor investments, pricing and supply chain savings [2]. North America coffeehouse operating expenses fell to 54.0% of company-operated revenue from 56.2%. Product mix, including cold beverages, cold foam and delivery, raised product costs and offset part of the gain [1][2].

The margin gain has translated into profit. Fourth-quarter non-GAAP operating income was $1.277 billion, up 42.5%, and non-GAAP EPS was $0.80, up about 54%. Full-year non-GAAP EPS was $2.72, above the $2.55 to $2.65 guidance [1][3]. The consolidated figure also benefited from the China deconsolidation and a roughly 20% decline in G&A, so the 440-basis-point North America gain is the direct evidence of store-level improvement [2]. That North America figure is management's measure; the release does not tabulate a segment reconciliation.

U.S. comps shifted toward ticket; International margin met expectations

U.S. comparable sales beat guidance, but the mix of growth changed. U.S. comparable transactions rose 2.4% in the fourth quarter, compared with 4.2% in the third quarter, while average ticket rose 5.2% [1]. Management said about half of the ticket growth came from pricing and delivery, and that sales transfer from closed coffeehouses contributed about 200 basis points; the company did not break out how much of that transfer affected transactions [2].

The International margin structure performed as the company described. International operating margin was 19.7% in the fourth quarter, and income from equity investees was a positive $20.6 million [1]. Company-operated comparable sales, now mainly Japan and the UK, rose only 0.9%, with transactions down 2.8%; management attributed this to tougher comparisons in Japan. This business is about 8% of company revenue [1][2].

Conclusion

The results confirm that Starbucks can still convert comparable sales growth into store margin after lapping its labor investments and losing tariff refunds. Full-year operating cash flow was $4.988 billion, capital expenditures fell to $1.264 billion, net proceeds of $2.544 billion from the China transaction went toward debt repayment, and the company plans to resume about $1 billion of share repurchases in fiscal 2027 [1][2].

The shift in the growth mix will shape how margins expand from here. Company guidance for fiscal 2027, a 53-week year, calls for North America comparable sales growth of about 4%, leaning slightly toward ticket, and a non-GAAP operating margin of 13.5% to 14.0% [1][2]. With slower comps, sales leverage will be smaller. Management said about half of the $2 billion savings program has been realized and lower coffee prices should help, but these remain targets [2]. The first-quarter report in late January 2027 will test whether U.S. transactions keep growing and whether North America coffeehouse operating expenses keep falling as a share of revenue.

Sources

[1] SBUX 8-K filed 2026-10-29 · Q4 FY2026 earnings release (8-K, 2026-10-29) https://www.sec.gov/Archives/edgar/data/829224/000082922426000154/sbux-09272026xearningsrele.htm [2] SBUX Q4 FY2026 earnings call 2026-10-29 (earnings call, 2026-10-29) [3] SBUX 8-K filed 2026-07-29 · FY2026 guidance raised (8-K, 2026-07-29) [4] SBUX 10-K filed 2025-11-14 · business, segments and revenue mix (10-K, 2025-11-14) [5] SBUX 8-K filed 2026-09-24 · second North America closure wave and store-opening revision (8-K, 2026-09-24) [6] SBUX 10-Q filed 2026-07-29 · Q3 FY2026 North America revenue and margin bridge (10-Q, 2026-07-29)