Starbucks is Back to Growth After Strong Q1 Performance
Starbucks is Back to Growth After Strong Q1 Performance
Rich DupreyWed, April 29, 2026 at 6:02 PM UTC
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Starbucks (SBUX) reported Q2 FY2026 adjusted EPS of $0.50, beating estimates by 13.64%, with global comparable store sales rising 6.2% driven by 4.4% transaction growth in North America as operational improvements restore customer traffic. Channel Development revenue surged 38.8% on Global Coffee Alliance momentum with Nestlé.
CEO Brian Niccol’s turnaround plan is showing results with both traffic recovery and margin expansion, though North America operating margins contracted 170 basis points from labor investments and tariffs while China comps remain weak at 0.5% under the new Boyu Capital joint venture structure.
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Starbucks (NASDAQ:SBUX) reported Q2 FY2026 results after the close on April 28, and investors loved what they saw. The coffee giant beat on both lines, raised full-year guidance, and called the quarter the official turn in CEO Brian Niccol's turnaround. Shares responded in kind, climbing 8.68% the next session to $105.72.
'Back to Starbucks' Finally Shows Up in the Numbers
The headline story is traffic. Global comparable store sales rose 6.2%, well ahead of expectations, with North America comps up 7.1% on 4.4% transaction growth. After several quarters of falling visits, customers are walking back through the door. That is the cleanest possible signal that the operational fixes (faster service, better staffing, reimagined Rewards tiers) are working.
Channel Development was the other standout, with revenue up 38.8% on Global Coffee Alliance momentum with Nestlé. I liked the breadth here. Growth was not leaning on any single lever.
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China and North America Margins Need Watching
China comps came in at just 0.5%, with ticket down 1.6%, a reminder that the new Boyu Capital joint venture (Boyu 60%, Starbucks 40%) is addressing structure first, with demand still to follow. Closer to home, North America operating margin contracted 170 basis points on labor investments, mix, tariffs, and elevated coffee pricing. If you are tracking the recovery, that is the line to watch next quarter.
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Margins Lead, Guidance Follows
Key Figures
Adjusted EPS: $0.50 vs. $0.44 expected (13.64% beat)
Revenue: $9.53B vs. $9.23B expected, up 8.79% YoY
Operating income: $828.1M, up 37.79%
Net income: $510.9M, up 32.98%
Operating margin: 9.4%, up 110 bps
International operating margin: 19.4%, from 11.6% (China held-for-sale depreciation cessation)
Management raised FY2026 guidance across the board: global and U.S. comp sales of 5.0% or greater (from 3%+) and non-GAAP EPS of $2.25 to $2.45. Per the custom brief, at least 12 analysts raised price targets following the report.
Niccol Calls the Turn
CEO Brian Niccol said "Our second quarter marked the turn in our turnaround as our Back to Starbucks plan drove both top and bottom line growth." He added that "This is the Starbucks our customers deserve." The tone was confident, and the raised outlook backed it up.
Can the Comp Momentum Hold?
The bar moves up from here. With shares now near the 52-week high of $104.15 and trading at a rich forward P/E of 43, execution has to keep pace. I would keep an eye on whether North America margins stabilize next quarter and whether China shows any signs of life under the new Boyu structure. The turnaround story is real. Now it has to compound.
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Source: “AOL Money”
