Earnings Call Insights: Starbucks Corporation (SBUX) Q4 2025
Management View
- Brian Niccol, Chairman & CEO, reported “5% global revenue growth and global comparable store sales growth of 1% in the fourth quarter, making it our first positive quarter in 7 quarters.” He highlighted that North America company-operated comps improved to flat year-over-year, with positive comp growth in Canada and improved transaction comps across all regions and dayparts in the U.S. Niccol stressed, “Our U.S. company-operated sales comp turned positive in September, driven by transactions, and it’s remained positive through October, reflecting the momentum taking shape in our business.”
- Niccol detailed the scaling of the Green Apron Service, stating, “August was a milestone as we went live with a new standard across our full U.S. company-operated portfolio.” He noted investments in staffing, extended hours, and operational improvements, such as the Smart Queue sequencing algorithm, resulting in over 80% of U.S. company-operated coffee houses with cafe service times averaging 4 minutes or less.
- Niccol discussed portfolio assessment: “As a result, for the full year in fiscal 2025, our North America company-operated store counts declined by approximately 1% on a net basis.” The company is piloting a new coffee house prototype and completed nearly 70 uplifts, aiming for more than 1,000 by the end of fiscal 2026.
- Menu innovation was emphasized, with the introduction of Protein Cold Foam and Protein Lattes. Niccol stated, “Non-Starbucks Rewards customer transactions grew year-over-year for the second consecutive quarter across all dayparts, validating our approach to marketing.”
- International expansion continued, with record revenues of $2.1 billion in Q4 and $7.8 billion for the year. The company opened 316 net new coffee houses in Q4 and surpassed 8,000 stores in China.
- Catherine Smith, Executive VP, CFO & Principal Accounting Officer, stated, “Our Q4 consolidated revenue was $9.6 billion, up 5% to the prior year, reflecting 2% net new company-operated store growth and a 1% increase in global comparable store sales, driven by international outperformance, positive comps in Canada and continued progress in our U.S. business.”
- Smith pointed out, “Our Q4 consolidated operating margin was 9.4%, contracting 500 basis points from the prior year. This was primarily driven by inflation, led by coffee prices and tariffs as well as investments in support of Back to Starbucks, largely in labor hours.”
Outlook
- Management indicated, “We expect that our consolidated G&A in fiscal 2026 will run lower than fiscal 2023 levels, serving as a partial offset to our Back to Starbucks investments.” Smith added, “While we expect to provide our near- and longer-term outlook during our Investor Day in late January, the following are some initial considerations for our U.S. company-operated business for fiscal 2026… we have good reason to believe that our U.S. company-operated comps should build through the year, we also know that recoveries are not always linear.”
- The company plans to complete more than 1,000 coffee house uplifts by the end of fiscal 2026.
Financial Results
- Starbucks reported Q4 consolidated revenue of $9.6 billion. EPS for the quarter was $0.52, down 34% from the prior year. Global comparable store sales increased 1%, with international segment net revenue growth of 9% year-over-year in Q4 and record quarterly international revenue of over $2 billion. The company noted, “In the fourth quarter, we had 107 net store closures globally as part of the restructuring we announced in September.”
- U.S. comparable store sales were flat year-over-year, with ticket up 1% and transaction comps down 1%. The 90-day active Starbucks Rewards member base grew to 34.2 million.
- China saw comparable store sales grow 2% in the quarter, driven by a 9% improvement in comparable transactions. The U.S. delivery business grew nearly 30% year-over-year in Q4.
Q&A
- David Palmer, Evercore ISI: Expressed concerns that “Back to Starbucks” could focus too much on in-cafe rather than the multi-channel business. Niccol responded, “Back to Starbucks is comprehensive… The foundation is this customer connection. I think the visible transformation, you’ll see in our uplifts, but I think you’ll also experience it when you interact with our baristas.”
- Danilo Gargiulo, Bernstein: Asked about the protein platform and pricing. Niccol explained the protein platform is “really just kind of the first step, I think, in continuing to drive health and wellness… I’m very optimistic as the awareness builds, this platform will continue to build.”
- David Tarantino, Baird: Queried the progress of Green Apron Service. Niccol responded, “We’re really only like 8 or 9 weeks in on it. And the good news is it does appear that it continues to build week-to-week.”
- John Ivankoe, JPMorgan: Asked if Green Apron was defensive or offensive. Niccol replied, “It was a combination of fixing some missteps and then putting us on the offensive because I believe we’re best positioned to provide the best customer experience in the industry.”
- Lauren Silberman, Deutsche Bank: Inquired about morning vs. afternoon performance. Niccol attributed morning outperformance to staffing and speed, with sequential improvement in the afternoon due to extended staffing.
- Brian Harbour, Morgan Stanley: Asked about incremental investments in Green Apron Service and product costs. Niccol stated, “We don’t foresee additional investments, I would say, to be able to make the Green Apron Service standard come to life.”
- Sara Senatore, BofA: Asked about store closures and margin impact. Smith stated, “It’s going to be slightly accretive to our profitability going forward because they were unprofitable.”
- Jeffrey Bernstein, Barclays: Sought guidance for fiscal ’26. Smith replied, “We’ll give you 2026 and longer-term guidance at our Investor Day… It starts with top line. We hope to continue to see those transactions grow.”
- Andrew Charles, TD Cowen: Asked about value perception and Q1 outlook. Niccol emphasized targeted pricing and Smith shared, “We were pleased that September had turned positive, and that trend had continued through October.”
- Hyun Jin Cho, Goldman Sachs: Asked about younger consumer behavior. Niccol noted, “We have seen a really nice response both in transactions and sales over this most recent quarter.”
- Andy Barish, Jefferies: Asked about the license business. Niccol said, “We do believe there’s the opportunity for us to grow from a unit standpoint… making sure that we build the right next kind of set of units and that they get operated up to the Green Apron Service standard going forward.”
- Christopher O’Cull, Stifel: Inquired about competition from beverage brands. Niccol replied, “Our best offense is to make sure that we stand for the craft around our coffee and drinks and food and then the customer connection and experience that we provide.”
Sentiment Analysis
- Analysts expressed skepticism about the comprehensiveness of “Back to Starbucks,” the sustainability of transaction gains, and the outlook for cost management and margin recovery. Questions often addressed structural changes, competitive dynamics, and pricing strategy, with a generally neutral to slightly skeptical tone.
- Management maintained a confident and forward-looking stance, frequently referencing turnaround momentum, operational discipline, and the durability of new initiatives. Niccol stated, “I’m confident we have the right team and strategy to deliver long-term sustainable growth.” Tone was positive and assertive, with some caution regarding the timing of full recovery.
- Compared to the previous quarter, analyst tone remains cautious but increasingly focused on the trajectory of recovery and margin restoration. Management’s confidence has strengthened, moving from “early stages of our turnaround” in Q3 to highlighting “momentum” and “turning point” in Q4.
Quarter-over-Quarter Comparison
- Guidance language shifted from caution in Q3, when Smith stated “we are conservative on how the current year-over-year trends will change in Q4,” to a more constructive tone in Q4 as management pointed to positive comps in September and October.
- Strategic focus advanced from laying operational foundations to scaling Green Apron Service, accelerating portfolio assessment, and launching new menu innovation.
- Analysts in both quarters maintained concerns around transaction recovery, cost management, and innovation execution, but Q4 saw more detailed questions on specific programs such as the protein platform and staffing investments.
- Key metrics improved, with Q4 marking the first positive global comp growth in 7 quarters and a 5% increase in consolidated revenue, compared to a 2% global comp decline and 3% revenue growth in Q3.
- Management sentiment evolved from building foundations to demonstrating early results and confidence in the multiyear turnaround.
Risks and Concerns
- Management cited inflation, particularly coffee prices and tariffs, as key headwinds, affecting operating margins.
- Analysts raised concerns about the sustainability of transaction gains, the risk of further store closures, and the pace of recovery in the U.S. business.
- Smith noted, “We expect the impact to operating margins to be slightly accretive” from store closures, but acknowledged that “recoveries are not always linear.” The company is prioritizing disciplined capital deployment and cost controls.
Final Takeaway
Starbucks management asserts that its “Back to Starbucks” plan is delivering early signs of turnaround, with positive global comps, renewed transaction growth, and robust international expansion. The company is accelerating operational initiatives, including the Green Apron Service and over 1,000 planned coffee house uplifts by the end of fiscal 2026, while controlling costs and emphasizing disciplined growth. Despite inflationary pressures and ongoing restructuring, Starbucks expresses confidence in its strategy, highlighting a pivotal quarter in its turnaround and signaling further updates at its upcoming Investor Day.