Starbucks Announces Second Quarter Fiscal 2026 Financial Results
Starbucks Corporation (Nasdaq: SBUX) has announced its financial results for the 13-week fiscal second quarter ending March 29, 2026, delivering a solid performance that reflects early success in its ongoing turnaround strategy. The company reported both top-line and bottom-line growth, supported by improved store traffic, higher customer spending, and operational efficiencies, even as it navigates inflationary pressures and strategic restructuring initiatives.
Strong Comparable Sales Growth Across Key Markets
During the second quarter of fiscal 2026, Starbucks recorded a global comparable store sales increase of 6.2%. This growth was primarily fueled by a 3.8% rise in comparable transactions and a 2.3% increase in average ticket size, indicating both higher customer visits and greater spending per transaction.
North America remained a key growth driver, with comparable store sales rising 7.1%. This was supported by a 4.4% increase in transactions and a 2.6% increase in average ticket. Within this region, the U.S. market mirrored this performance, also posting a 7.1% increase in comparable store sales, driven by similar gains in traffic and ticket size.
International markets showed more modest growth, with comparable store sales increasing 2.6%. This was largely driven by a 2.1% increase in transactions and a smaller 0.5% rise in average ticket. In China, one of Starbucks’ most important growth markets, comparable store sales grew by 0.5%. While transactions rose 2.1%, this was partially offset by a 1.6% decline in average ticket, reflecting a more cautious consumer environment.
Revenue Growth and Store Expansion
Starbucks reported consolidated net revenues of $9.5 billion for the quarter, representing a 9% increase year-over-year, or 8% growth on a constant currency basis. This reflects strong underlying demand and improved operational execution across its global footprint.
The company opened 11 net new stores during the quarter, bringing its total global store count to 41,129. Of these, 52% are company-operated, while 48% are licensed locations. The U.S. and China together account for 61% of Starbucks’ global store portfolio, with 16,944 stores in the U.S. and 7,991 in China.
Margin Expansion and Profitability
Profitability improved significantly during the quarter. Starbucks reported a GAAP operating margin of 8.7%, representing an expansion of 180 basis points compared to the previous year. This improvement was driven by sales leverage and reduced store operating costs, particularly following the classification of certain China retail assets as held for sale, which reduced depreciation and amortization expenses.
On a non-GAAP basis, operating margin increased by 120 basis points to 9.4%, or 110 basis points on a constant currency basis.
Earnings also showed strong growth. GAAP earnings per share rose 32% year-over-year to $0.45, while non-GAAP earnings per share increased 22% to $0.50, demonstrating continued financial momentum.
However, the company’s effective tax rate increased to 29.8% from 23.5% in the prior year, largely due to restructuring activities in China, changes in reinvestment assumptions, and higher pre-tax earnings. The non-GAAP effective tax rate also rose to 27.1%.
Segment Performance Highlights
In North America, revenues increased 7% to $6.9 billion, driven by strong comparable store sales growth. However, operating income declined to $679.9 million from $748.3 million in the prior year, with operating margin contracting to 9.9%. This decline was primarily due to increased labor investments tied to the company’s “Back to Starbucks” initiative, along with inflationary pressures, including tariffs and elevated coffee prices.
The International segment delivered strong results, with revenues increasing 10% to $2.1 billion. Operating income rose sharply to $398.6 million from $217.0 million in the previous year, and operating margin expanded to 19.4%. This improvement was largely due to reduced depreciation expenses related to China asset reclassification and strong sales leverage.
The Channel Development segment saw the highest revenue growth, increasing 39% to $567.8 million, driven primarily by the Global Coffee Alliance. Operating income rose to $229.9 million, although operating margin declined to 40.5% due to product mix changes and relatively lower income from joint ventures.
Strategic Developments and Transformation Progress
Starbucks continues to execute its “Back to Starbucks” turnaround strategy, which is focused on enhancing customer experience, strengthening brand engagement, and improving operational efficiency.
In January 2026, the company hosted its Investor Day in New York City, where leadership outlined progress on the turnaround plan and introduced new innovations, including enhancements to the coffeehouse experience and a revamped loyalty program.
In March, Starbucks launched its redesigned loyalty program featuring three tiers—Green, Gold, and Reserve—aimed at delivering more personalized rewards and deeper customer engagement. The program represents a key pillar of the company’s strategy to drive repeat visits and long-term customer loyalty.
Also in March, the company held its 34th Annual Meeting of Shareholders, where shareholders approved all director nominees and executive compensation proposals.
In April, Starbucks introduced a new incentive program for hourly employees, reinforcing its commitment to competitive compensation and aligning employee rewards with the company’s transformation success.
A major strategic milestone was the completion of a joint venture with Boyu Capital to operate Starbucks retail operations in China. Under this agreement, Boyu Capital holds a 60% stake, while Starbucks retains 40% ownership and continues to control the brand and intellectual property. This move is expected to support sustainable growth in China, with financial impacts to be reflected starting in the third quarter.
Additionally, Starbucks announced plans to expand its U.S. presence with a new office in Nashville, Tennessee, as part of a broader restructuring initiative to optimize its support organization.
Shareholder Returns and Outlook
The company declared a quarterly cash dividend of $0.62 per share, payable on May 29, 2026. Starbucks has now delivered 64 consecutive quarters of dividend payouts, with a compound annual growth rate of 17%, underscoring its commitment to returning value to shareholders.
Looking ahead, Starbucks updated its fiscal year 2026 guidance. The company expects:
- Global and U.S. comparable store sales growth of at least 5%
- Consolidated net revenues to remain roughly flat year-over-year
- Slight improvement in non-GAAP operating margin
- Non-GAAP earnings per share in the range of $2.25 to $2.45
- Approximately 600 to 650 net new store openings globally
The guidance reflects the transition of Starbucks China retail operations to a joint venture model in the second half of the fiscal year.
Leadership Perspective
Chairman and CEO Brian Niccol emphasized that the second quarter marks a turning point in the company’s turnaround journey, with the “Back to Starbucks” strategy beginning to deliver tangible results. CFO Cathy Smith echoed this sentiment, noting that revenue growth is leading the recovery, with margin improvements expected to follow as operational efficiencies take hold.
Overall, Starbucks’ Q2 FY2026 performance demonstrates meaningful progress in its transformation efforts, positioning the company for sustained growth and improved profitability in the quarters ahead.
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