Starbucks Sales Miss Expectations, but Its U.S. Turnaround Is Gaining Steam

Starbucks reported mixed fourth-quarter results on October 29, 2026, as revenue fell short of Wall Street expectations despite stronger customer demand in the United States. The coffee chain's latest performance suggests that its turnaround strategy under CEO Brian Niccol is gaining momentum, particularly in its home market.

For the quarter ended September 27, Starbucks reported net revenue of $9.14 billion, down 4% year over year and below analysts' expectations of approximately $9.23 billion. However, adjusted earnings reached 80 cents per share, beating the estimated 72 cents.

U.S. Sales Growth Exceeds Expectations

Starbucks' U.S. comparable-store sales increased 7.7% during the quarter, surpassing analysts' expectations of 6.5%. Global comparable sales also rose 7.2%, supported by stronger customer spending and an increase in transactions.

The improvement reflects growing customer interest in Starbucks' coffeehouses, seasonal beverages and food offerings. Matcha has also become a significant growth category for the company, generating approximately $1 billion in annual business.

However, international comparable sales increased just 0.9%, as declining customer traffic offset higher average spending. This weaker performance highlighted the uneven recovery across Starbucks' global markets.

Back to Starbucks Strategy Shows Progress

CEO Brian Niccol's Back to Starbucks initiative has focused on improving customer experience, simplifying menus, strengthening employee support and reducing service delays.

Over the past two years, the company has invested in staffing, employee training and coffeehouse renovations to make stores more welcoming and improve service consistency. Starbucks completed more than 1,700 coffeehouse upgrades across the United States and Canada during fiscal 2026.

The company also announced plans to close approximately 250 underperforming North American locations as part of its broader restructuring efforts.

China Business Transition Affects Revenue

The decline in overall revenue was partly connected to Starbucks' transition of its Chinese retail operations into a joint venture with Boyu Capital. The transaction changed how revenue from China is reported, reducing the contribution from company-operated stores.

Starbucks continues to hold a 40% stake in the Chinese business, while the partnership is intended to support its future expansion in the market.

Fiscal 2027 Outlook and Growth Plans

Looking ahead, Starbucks expects adjusted earnings per share of $3.15 to $3.25 in fiscal 2027, slightly above analysts' expectations. However, the company anticipates revenue could decline approximately 1%, reflecting changes in its international business structure.

The company also plans to resume share repurchases, with approximately $1 billion allocated towards buying back shares.

Starbucks' latest results indicate that its U.S. recovery is becoming more established, although weaker international performance and revenue pressures remain challenges. The company's ability to maintain customer traffic, improve profitability and deliver consistent growth will be central to its next phase of recovery.

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