Starbucks starting to build momentum

SEATTLE — Starbucks Corp. is in full turnaround mode, with a strong second quarter building on the momentum of a robust first quarter that saw global sales grow by 5% to $9.9 billion and global comparable store sales accelerate by 4%.   

“Q2 marked a milestone for the business,” said Brian Niccol, chairman and chief executive officer, during an April 28 conference call with securities analysts. “We delivered growth on both the top and bottom line for the first time in more than two years.”

Net income for the quarter ended March 29 was $511 million, equal to 45¢ per share on the common stock, and an improvement compared with the previous year when the company earned $384 million, or 34¢ per share.

Quarterly sales rose 9% to $9.5 billion from $8.8 billion the year before.

“Our US company-operated business grew transactions across all dayparts, with mornings now roughly back to fiscal 2022 levels and we saw broad-based spend growth across all income levels and age demographics,” Niccol said. “Our delivery business also contributed to both comp ticket and transaction growth in the quarter. We expanded delivery access across our US company-operated portfolio last fiscal year, and it’s proven to be a largely incremental revenue stream, growing more than 30% year to date across our US company-operated business.

“International revenues grew nearly 8% year over year as momentum built globally. Comparable sales increased nearly 3%, and our top 10 international markets, including China, all posted positive comps for the first time in nine quarters.”

Sales in North America rose 7% to $6.3 billion from $5.9 billion during the same quarter of fiscal 2025. Operating income in the business unit fell 9% to $680 million from $748 million the year before.

The company attributed the operating income decline to increased product and distribution costs associated with tariffs and high coffee prices as well as higher store operating expenses.

Photo: ©MELISSAMN – STOCK.ADOBE.COM

“While market dynamics can change, we expect these tariff and coffee pressures to moderate in the back half of fiscal 2026, especially given recent trends in coffee prices,” said Catherine Smith, chief financial officer.

For the quarter, US comparable store sales rose 7% led by transactions up more than 4%, according to the company.

“Average ticket rose nearly 3%, driven by a combination of our growing delivery business, beverage mix, our bakery launch driving greater food attach, and the continued popularity of modifications led by our cold foam platform,” Smith said.

Smith highlighted the performance of the cold foam platform during her comments, saying that platform sales grew 40% during the quarter in the United States.

“Cold foam, our leading modifier, continues to grow in popularity, with platform sales up more than 40% in Q2 across our US company-operated business,” she said. “Innovation across new flavors and the introduction of protein have further strengthened the appeal of cold foam, especially among Gen Z.”

Another platform that contributed to the quarterly growth was the company’s Refreshers line of beverages.

“In April, we launched new energy Refreshers and our new mango flavor,” Niccol said. “Both have exceeded our expectations and strengthen a proven $2 billion platform.

“Customers can now tailor the caffeine level of the Refresher with the same ease and flexibility as flavors, creating more reasons for customers to visit later in the day. We’ll continue to build on (the) Refresher platform through the year, (with) even more flavors and blended versions as well.”