Shares in coffeehouse colossus Starbucks (SBUX:NASDAQ) frothed up 5.5% to $101 despite Q1 earnings missing estimates. The firm extended its tasty year-to-date run even after turnaround-related costs and a margin hit.
Instead, investors focused on the fact revenue beat forecasts and US sales rose for the first time in two years. This shows CEO Brian Niccol’s turnaround plan, including a return to the Seatle-based firm’s coffeehouse roots, is taking hold.
| Share price: $101 (+5.5%) | PE: 40.6x |
| Market cap: $109bn | Yield: 2.6% |
Just the beginning
Comparable sales growth at company-operated stores in the US returned to a transaction-driven increase for the first time in eight quarters during the 13 weeks ended 28 December. Starbucks also reported a 4% rise in global comparable sales, handily beating estimates of 2.25%
Adjusted earnings per share came in at 56 cents versus the 59 cents Wall Street was looking for after turnaround-related costs, tariffs and elevated coffee prices. But revenue growth of 6% to $9.92 billion trounced the $9.67 billion analysts expected.
‘Our Q1 results demonstrate our “Back to Starbucks” strategy is working and we believe we’re ahead of schedule,’ enthused Niccol, the rock-star restaurants operator poached from Chipotle Mexican Grill (CMG:NYSE) in late 2024.
‘It’s great to see the sales momentum driven by more customers choosing Starbucks more often, and this is just the beginning,’ he teased.
Robust 2026 forecast
Starbucks also shared its first financial outlook since suspending its forecast in October 2024, with Niccol set to outline his strategy to investors in New York on 29 January.
The company expects to serve up FY26 global same-store sales growth of ‘3% or greater’, compared with estimates of a 2.94% rise.
In November, Starbucks sold control of its operations in China to Boyu Capital after years of struggling with weak sales in its second-biggest market. Same-store sales in the region rose 7% in the first quarter, compared with a 2% rise in the preceding three month period.
Read the press release here: https://investor.starbucks.com/ir-home/default.aspx
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