Starbucks' fiscal 2026 fourth-quarter revenue reached $9.14 billion, slightly below the LSEG consensus of $9.23 billion, with a year-over-year decline of 4.5% attributed to its transition in China to a joint-venture model. However, adjusted earnings per share (EPS) surged 54% year-over-year to 80 cents, surpassing the consensus estimate of 72 cents.
Global comparable store sales rose 7.2%, exceeding the FactSet expectation of 6%, while North America comparable store sales increased by 7.9%, beating the anticipated 7% growth. Despite a 2% drop in shares during extended trading, likely due to profit-taking after a recent stock recovery, Starbucks has shown resilience following a significant decline earlier this year.
The company is maintaining a hold-equivalent rating with a price target of $120 per share. CEO Brian Niccol emphasized that Starbucks is transitioning from a turnaround strategy to a growth strategy, with five consecutive quarters of positive global comparable store sales growth.
Looking ahead, Starbucks anticipates North America comparable store sales growth of about 4% for fiscal 2027, slightly below the 4.2% consensus, but still above Niccol's long-term target of at least 3%. The company is also focusing on enhancing customer service and menu innovation, which have contributed to increased brand affinity.
Starbucks plans to modernize its technology and expand its cafe uplift initiatives, aiming for about 2,000 locations in North America. The initial guidance for fiscal 2027 includes a projected adjusted EPS of $3.15 to $3.25, reflecting nearly 18% year-over-year growth, and an adjusted operating margin expected between 13.5% and 14%.
Overall, Starbucks appears well-positioned for continued growth under Niccol's leadership, despite ongoing economic challenges