Starbucks reports rise in customer traffic and revenue, though profits decline amid turnaround efforts

2026-01-29

The BareStory

Starbucks reported fiscal first-quarter results on Wednesday showing a 3% increase in customer transactions, marking the first time traffic has grown in two years. The coffee chain posted revenue of $9.92 billion for the period ending December 28, surpassing market expectations. However, adjusted earnings per share of 56 cents missed analyst projections. Global same-store sales rose by 4%, supported by a matching 4% increase in the United States, which executives attributed partly to holiday menu offerings.

Despite the rise in revenue, the company’s net income dropped sharply to $293.3 million, down from $780.8 million during the same period a year earlier. Starbucks attributed the lower profits to costs associated with its ongoing turnaround plan, as well as tariffs and higher coffee prices. CEO Brian Niccol stated that the company’s "Back to Starbucks" strategy—which includes revamping cafes, adjusting staffing, and refining the menu—is in its early stages but progressing ahead of schedule.

Looking forward to fiscal 2026, Starbucks projected adjusted earnings per share between $2.15 and $2.40, with global and U.S. same-store sales growth of at least 3%. The company also announced plans to enter a joint venture with Boyu Capital to operate its business in China, its second-largest market, where same-store sales recently grew by 7%. Executives are scheduled to outline further details regarding the company’s long-term financial targets during an investor presentation in New York City on Thursday.

Left Perspective

Customer traffic growth returns after two years
Revenue figures surpass market expectations
Strategic overhaul is progressing ahead of schedule

Right Perspective

Net income has declined sharply year-over-year
Adjusted earnings missed analyst projections
Rising costs and economic headwinds impact margins

Left Perspective

• Customer traffic growth returns after two years After a two-year period of stagnation or decline, Starbucks reported a 3% increase in customer transactions during the fiscal first quarter. This resurgence in foot traffic was accompanied by a 4% rise in global same-store sales, driven partly by a matching 4% increase in the United States market.

• Revenue figures surpass market expectations The company posted revenue of $9.92 billion for the period ending December 28, a figure that exceeded market expectations. Growth was also noted in international markets, specifically in China, the company’s second-largest market, where same-store sales recently increased by 7%.

• Strategic overhaul is progressing ahead of schedule CEO Brian Niccol indicated that the "Back to Starbucks" strategy, which involves revamping cafes and refining operations, is currently progressing ahead of schedule. Management remains positive about the long-term outlook, projecting fiscal 2026 adjusted earnings per share between $2.15 and $2.40.

Right Perspective

• Net income has declined sharply year-over-year Despite the increase in revenue, the company’s net income experienced a significant drop to $293.3 million, compared to $780.8 million during the same period a year earlier. This sharp decrease highlights the financial strain the company faces despite top-line growth.

• Adjusted earnings missed analyst projections While revenue beat expectations, the company’s profitability fell short, with adjusted earnings per share coming in at 56 cents. This figure missed the projections set by analysts, signaling that revenue gains did not translate as effectively to the bottom line as anticipated.

• Rising costs and economic headwinds impact margins Starbucks attributed its lower profit margins to a combination of internal and external cost pressures, including expenses related to its turnaround plan. Additionally, the company cited the negative financial impact of tariffs and higher coffee prices as factors weighing on current performance.

How it may affect me

As a U.S. reader:

• You may experience changes in service and atmosphere as the company advances its turnaround plan to revamp cafes, adjust staffing levels, and refine menu options.

• Local stores may feel busier given the recent rise in customer transactions and sales growth, marking the first increase in foot traffic in two years.

• Investors may observe mixed results as revenue surpassed expectations while profits fell sharply due to tariffs, higher coffee prices, and costs related to the turnaround plan.

Starbucks reports rise in customer traffic and revenue, though profits decline amid turnaround efforts

The BareStory

Left Perspective

Right Perspective

How it may affect me

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