STARBUCKS CORP Q4 FY2026 earnings call

Strategic Shift: 'Back to Starbucks' has transitioned from a turnaround plan to a growth plan, with results ahead of schedule for the fiscal 28 framework. Operational Excellence:

• Coffee Houses are performing better, with >80% of North America company-operated stores delivering positive comps (up from <50% YoY).
• Inventory availability is at an all-time high, with daily deliveries reaching ~90% of NA stores.
• Completed >1,700 store uplifts in FY26, restoring the 'third place' experience. Brand & Menu Innovation:
• Brand affinity near record levels; 90-day active Rewards members hit a record 36 million.
• Strong performance in Espresso, Refreshers, Matcha, and merchandise (Unicorn/Peanuts launches).
• Focus on creating a second peak in the afternoon via food attach and cold beverage innovation. Digital & Technology:
• Integrating delivery directly into the Starbucks app in Q2 FY27.
• Testing AI models in drive-thrus to improve order accuracy and partner-customer connection. Global Expansion:
• International unit growth accelerating (~3 new stores/day), aiming for ~40,000 international stores long-term.
• Rebuilding U.S. development pipeline for disciplined future growth.

North America: Net revenues grew 6.3% to $7.3 billion in Q4, driven by strong company-operated comps (U.S. +7.7%, Canada double-digit). U.S. growth was balanced between transactions (+2.4%) and ticket (+5.2%). North America operating margin expanded 440 basis points to approximately 16%. International: Delivered Q4 net revenues of $1.3 billion and operating income of $261.3 million. International company-operated comps grew 0.9%, led by the UK and Philippines, while Japan faced tougher comparisons. The deconsolidation of China’s retail operations impacts year-over-year comparisons through H1 FY27. Channel Development: Q4 net revenues declined 8.9% to $494.4 million due to the Global Coffee Alliance structure and absence of coffee price tailwinds; operating income remained flat.

Fiscal 2027 Outlook (53-week year):

• Consolidated Net Revenues: Expected to decrease ~1% YoY, including ~$700M revenue from the extra week.
• North America Comps: Approximately 4% growth.
• Consolidated Operating Margin: 13.5% to 14.0% (midpoint up ~190 bps YoY).
• EPS: $3.15 to $3.25 (~18% growth at midpoint).
• Unit Growth: ~1,200 net new global coffeehouses (International ~1,100; North America 90-100). Capital Allocation:
• Quarterly dividend raised to 63 cents/share.
• Share repurchases expected at ~$1 billion.
• CapEx expected at ~5% of net revenues.

China Transition Impact: Deconsolidation of China’s company-operated business creates headwinds for international revenue and comp comparisons through the first half of FY27. Supply Chain Execution: While improving, supply chain modernization (demand forecasting, replenishment cycles) is ongoing and critical for maintaining inventory availability and reducing waste. Consumer Spending: Consumers remain choiceful in spending, requiring continued focus on value perception and experience quality. Competitive Landscape: Maintaining market leadership in at-home and ready-to-drink coffee amidst changing consumer preferences and price trends.

Q: Analyst asked if the 4% NA comp guidance reflects an 'on-algo' year plus benefits from closures/uplifts and what drives this confidence.

A: CEO Niccol stated the guidance is built on fundamental strength, specifically Green Apron Service, digital/rewards programs, and menu innovation. He emphasized the business is a year ahead of schedule relative to FY28 guidance, driven by operational health and transaction strength.

Q: Analyst asked about FY27 margin evolution, coffee deflation, and progress on the $2B savings program.

A: CFO Smith noted margins will be more balanced throughout the year compared to FY26 volatility. The company is over 50% through the $2B savings program, with benefits flowing through COGS and OpEx in FY27/28. CEO Niccol added that achieving the low-end of FY28 margin targets (13.5%) in FY27 demonstrates strong cost discipline and top-line fundamentals.

Q: Analyst inquired about US unit growth ramp-up (expecting <100 net units in FY27 vs 300+ later) and drive-through tech timeline.

A: CEO Niccol explained the lower FY27 pace is due to resetting the development pipeline after closures. However, new smaller-format prototypes are performing well. For drive-throughs, AI testing is early-stage but aims to improve throughput and customer/partner experience, which will eventually boost top and bottom lines.

Q: Analyst asked about the components of FY27 comp growth (ticket vs. traffic) and the long-term North American unit potential.

A: CFO Smith indicated FY27 will lean slightly more toward ticket growth (via attach/mix and pricing below CPI) than transactions, though transactions remain strong. CEO Niccol confirmed a clear line of sight to 5,000 additional North American units long-term, suggesting upside as planning progresses.

Q: Analyst asked about the impact of 7-day/24-hour delivery on afternoon/morning sales and supply chain advantages.

A: CEO Niccol highlighted that daily deliveries and improved replenishment schedules (within 24 hours) ensure the right product availability. This supports fresh food experiences and grab-and-go cases, providing a significant advantage in keeping stock levels optimal across all day parts.