Starbucks Corporation Q1 FY2026 earnings call

• Back to Starbucks Plan: Progress on top line growth driven by transactions, with clear plans to turn top line growth into margin and earnings growth. Global revenue up 5%, comparable store sales 4%, 128 net new coffee houses, operating margin 10.1%, EPS $0.56.
• Green Apron Service: Improved coffeehouse experience with bigger rosters, new customer service standards, low hourly partner turnover, and SmartQ algorithm. Positive customer comments grew in U.S. company-operated coffee houses, throughput increased, service times below targets, and mobile orders accurate. Rolled out new expectations for coffeehouse leaders and launched Grow program to evaluate performance.
• Marketing and Menu Innovation: Overhauled approach putting Starbucks back in cultural conversation. Holiday offering drove customer traffic, brand affinity improved in U.S. with stronger visit consideration and ranking as first choice. Plans for continued marketing and menu innovation for seasonal strengths and brand leadership.
• International Growth: Strong comps in China (7% comparable store sales growth), Japan, and UK. Opened 79 net new international coffee houses, partnered with Boyu in China to expand presence, and announced expansion in Latin American and Caribbean markets with plans to surpass 1,000 coffee houses in Mexico.

Global revenue grew by 5% to $9.9 billion in Q1 fiscal 2026, with global comparable store sales accelerating to 4% growth. North America revenue grew 3% to $7.3 billion, with company-operated sales comps at 4% (led by 3 percentage points of comp transaction growth). International segment reported $2.1 billion in net revenue, growing 10% year over year, with comps growth of 5% led by China, Japan, and the UK. Channel Development segment net revenues grew 19% year over year due to higher revenue from the Global Coffee Alliance and ready-to-drink business.

For fiscal 2026, expect 3% or better global comp sales growth, led by 3% or better in U.S. Anticipate 600,000 to 650 net new coffee houses (150-175 net new U.S. company-operated, slight decrease in North America licensed, 450-500 net new international). Consolidated net revenues to grow at similar rate to comp growth. Operating margins to grow slightly year over year, driven by back half improvements. EPS guidance $2.15 to $2.40. Impact of China joint venture on financials considered, with potential dilutive effect but long-term accretive to margins.

• Inflation Pressures: Product and distribution cost inflation, including tariffs and elevated coffee pricing, contributed to margin contraction in North America.
• China Joint Venture Uncertainties: Timing of joint venture close and regulatory approvals could influence financial results, including potential impact on revenues and comps.
• Execution Risks: Sustaining top line growth and achieving margin improvement requires continued disciplined execution across various initiatives, with no guarantee of linear progress.

Q: David E. Tarantino asked about North America traffic performance and Green Apron service model impact on early stores.

A: Brian R. Niccol responded that North American comp result driven by transactions, half a point from sales transfer, and 650 pilot stores outperform fleet by 200 basis points in comp, driven by transactions and great customer service experience.

Q: Brian James Harbour asked about cost opportunities and timing.

A: Brian R. Niccol said there's a clear plan to track down $2 billion of cost over next two years, across P&L, with ongoing program and clear deliverables.

Q: David Sterling Palmer asked about fiscal 2026 earnings guidance and scenarios for high/low end.

A: Brian R. Niccol stated higher end driven by maintaining comp performance, supported by Green Apron service, marketing, and menu innovation.

Q: Lauren Danielle Silberman asked about differential between non-rewards and rewards member growth.

A: Brian R. Niccol said marketing, innovation, and relevance are driving both rewards and non-rewards customers, with rewards customer base growing and personalization key.

Q: John William Ivankoe asked about AM vs PM daypart execution and drive-thru competition.

A: Brian R. Niccol discussed opportunities in afternoon daypart with personalized beverages and food, and drive-thru, cafe, and mobile order pickup ecosystem as unmatched competitive advantage.

Q: Sara Harkavy Senatore asked about disaggregating comp drivers and guidance flexibility.

A: Brian R. Niccol said service, innovation, and marketing work together for transaction performance, and Catherine R. Smith mentioned guidance has flexibility to support business and invest in what matters most.

Q: Jeffrey Andrew Bernstein asked about U.S. portfolio reacceleration and store growth.

A: Brian R. Niccol said there are thousands of opportunities in U.S. and outside, with new unit growth plans and people capability system to support openings.

Q: Gregory Francfort asked about menu cleanup and platform opportunities.

A: Brian R. Niccol said menu reduced by 25-30%, with health and wellness, afternoon, and artisanal bake case platforms in pipeline.

Q: Peter Saleh asked about throughput initiatives and progress.

A: Brian R. Niccol said still opportunity to get under four-minute targets, with reps and Grow program helping, and delivery business emerging.

Q: Zach Fadem asked about margin performance and inflation glide path.

A: Brian R. Niccol and Catherine R. Smith said inflation pressures start to peak in Q2, rolling off in back half, with anniversary of Green Apron investment and sales leverage contributing to margin improvement in back half.

Q: Danilo Gargiulo asked about health and wellness platform contribution to comps.

A: Brian R. Niccol and Catherine R. Smith discussed protein platform as traffic driver and popular in cold foam, with incremental and repeat rates high.

Q: Christopher Thomas O'Cull asked about marketing impact on non-reward customers and margin contraction.

A: Brian R. Niccol said marketing made brand relevant, improving brand affinity and visitation, and Catherine R. Smith said marketing investment repurposed from less effective discounts to more effective dollars, included in guidance.