Starbucks forecasts fiscal 2027 earnings above estimates

Global same-store sales rose 7.2% in the quarter ended 27 September, the fifth consecutive quarter of growth, Starbucks said. That beat analysts' expectations of 5.4%, Reuters reported.

Adjusted earnings per share came in at $0.80, above the $0.72 estimate cited by Reuters and the $0.71 forecast cited by Yahoo Finance. Revenue was $9.1 billion, below the $9.2 billion Wall Street expected, a shortfall the company tied to moving its China retail business into a licensed joint venture with Boyu Capital. For the full year, revenue rose 2% to $37.9 billion, just shy of the $38 billion expected, while adjusted earnings per share rose 28% to $2.72 against a $2.62 estimate.

Shares fell about 2% in extended trading, Reuters reported, and slipped slightly before the bell on Friday.

Global comps of 7.2% compared with 7.9% in the third quarter and 6.2% for the full year, above the roughly 6% the company had guided.

Growth came mostly from the ticket. U.S. same-store sales rose 7.7%, split between roughly a 5% increase in ticket sizes and about a 2% increase in transactions, with merchandise and fall drinks leading, Yahoo Finance reported. North America comps rose 7.9%, QSR magazine reported.

Niccol calls time on the turnaround

Niccol used the call to retire the word turnaround. Back to Starbucks "started as a turnaround plan and now Back to Starbucks is our growth plan," he told investors.

Niccol joined in September 2024 and launched Back to Starbucks that year, promising a return to the coffeehouse. Two years on, the company forecast fiscal 2027 adjusted earnings per share of $3.15 to $3.25, against a $3.14 consensus compiled by LSEG, Reuters reported. It also said it aims to deploy about $1 billion towards share repurchases.

The store estate is shrinking even as the language turns to growth. Starbucks announced 250 North American closures in a September regulatory filing, about 1% of its roughly 18,000 stores in the region, according to the filing.

Starbucks expects the shutdowns to cost around $300 million in restructuring charges and to complete most of them by the end of fiscal 2026, it said. It was the second round of North American closures under Niccol. The company now expects about 440 net new company-operated and licensed coffeehouses globally in fiscal 2026, down from an earlier target of 600 to 650. Niccol still points to "significant long-term white space in North America," saying Starbucks could build around 5,000 additional coffeehouses over time.

Renovations are the visible half of the plan. By 10 September, Niccol said more than 1,000 had been completed in nine months, with thousands more planned for the next fiscal year. By fiscal year-end the company had completed more than 1,700 uplifts across North America, above its own goal, and expects more than 2,000 in the coming calendar year, it said. More than 80% of North American company-operated stores posted positive same-store sales in the quarter.

The bill behind the growth plan

None of this is free. Starbucks has committed at least $500 million to labor, adding staffing levels and hours as part of the overhaul, Reuters reported.

Niccol has described the Green Apron Service program behind that spend as the largest operating standards and customer service investment in brand history, according to QSR magazine. The company says it has achieved over 50% of a $2 billion gross savings program to help pay for it.

Consolidated operating margin expanded to approximately 14% in the fourth quarter, the company said. In the third quarter, operating margin was 14.4%, up from 10.1% a year earlier, helped by tariff refunds that largely offset tariff-related costs. Niccol told investors the coming year will focus on technology and modernization. He listed an AI system to help baristas take drive-through orders, plus systems that could recognize customers as they arrive and present personalized digital menus.

International is the weak spot. Fourth-quarter international sales rose 0.9%, missing expectations of roughly 3% growth, as transactions fell about 3% and the average ticket rose 4%, Yahoo Finance reported.

What has to go right in fiscal 2027

Starbucks expects North America same-store sales to rise roughly 4% in fiscal 2027, CFO Cathy Smith said. That is below the 7.9% North America comp in the fourth quarter reported by QSR magazine and the 7.2% global comp.

CFO Cathy Smith said any pricing will remain focused and well below CPI, which stood at 3.7%, Yahoo Finance reported. Management said capital allocation will prioritize store renovations, dividend increases and targeted share repurchases. In October the board raised the quarterly dividend to $0.63 from $0.62, the company said.

Starbucks had targeted at least 1,500 uplifts at about $150,000 each by fiscal year-end and plans to accelerate renovation spending in fiscal 2027, according to 247wallst. The "major tech modernization" will roll through the same period, with Niccol saying there is room to stretch the three-hour morning peak toward four hours and build afternoon traffic. Daily deliveries were reaching close to 90% of North American stores, and 90-day active Starbucks Rewards members rose 6% year over year to 36 million, QSR magazine reported.

Niccol said traffic gains are now spread across income tiers, a change from the pressure Starbucks faced as consumers grew more careful about spending. The company will need to show that pace in fiscal 2027.