Starbucks Q4 Earnings Beat Masks Revenue Miss and International Weakness

Key points

• Starbucks posted adjusted earnings of 80 cents per share, beating the 72-cent Wall Street estimate, but net revenue fell 4% to $9.14 billion, missing the $9.23 billion forecast due to the China joint venture transition.
• Global same-store sales grew 7.2%, exceeding the 6% estimate, driven by U.S. same-store sales growth of 7.7%, which was fueled by a 5% increase in ticket sizes and a 2% rise in transactions.
• International comparable sales rose only 0.9%, missing the 3.2% forecast, as a 3% decline in transactions offset a 4% increase in average ticket size.
• CEO Brian Niccol stated the turnaround plan is working, noting a healthier portfolio and increased customer traffic, while projecting fiscal 2027 adjusted EPS of $3.15 to $3.25 and a 1% revenue decline.
• Starbucks confirmed it is not acquiring Chipotle, dismissing earlier rumors, and plans to introduce delivery services in its app in the second quarter of fiscal 2027, along with AI-enhanced mobile ordering.

Background

This report follows Starbucks' earlier announcement in September to close approximately 250 stores in the U.S. and Canada, reducing its store count by roughly 1% as part of its turnaround strategy. The company has been working to accelerate growth beyond its initial turnaround plan, with recent rumors suggesting potential acquisition of Chipotle, which Starbucks explicitly denied in early October. The current results reflect the ongoing impact of the China business transition to a joint venture model, which has affected revenue figures but not the core operational momentum in North America.

How outlets are covering it

Yahoo Finance emphasizes the strength of the U.S. turnaround, highlighting the 7.7% same-store sales growth and the CEO's confidence in the plan, while noting the revenue miss due to the China joint venture. CNBC focuses on the mixed results, pointing out the international underperformance and the weaker-than-expected revenue outlook for fiscal 2027, which includes a 1% decline compared to analyst expectations of 1.4% growth. Both sources agree on the earnings beat and the positive U.S. performance but differ in emphasis: Yahoo Finance highlights the CEO's optimism and future growth potential, while CNBC stresses the international weakness and the cautious revenue outlook.

Why it matters

Starbucks' results indicate a successful turnaround in the U.S. market, with strong same-store sales growth and increased customer traffic, but the international underperformance and revenue decline due to the China joint venture raise concerns about global growth. The company's fiscal 2027 outlook, with a 1% revenue decline, suggests continued challenges in international markets, while the U.S. momentum and planned initiatives like delivery services and AI-enhanced ordering may drive future growth. The dismissal of the Chipotle acquisition rumor also clarifies the company's strategic focus on internal growth rather than external acquisitions.

What to watch

Starbucks will focus on executing its fiscal 2027 priorities, including the introduction of delivery services in its app in the second quarter and the use of AI for search and mobile ordering. The company will also monitor the impact of the China joint venture transition on revenue and continue to address international underperformance. Analysts will watch for any signs of improvement in international sales and the effectiveness of the turnaround plan in driving long-term growth.