Starbucks Corporation (SBUX Quick QuoteSBUX - Free Report) reported mixed first-quarter fiscal 2026 results, with earnings missing the Zacks Consensus Estimate and net revenues beating the same. The top line increased, but the bottom line declined from the prior-year quarter’s figure.

Following the results, the company’s shares are up 8% in the pre-market trading session today. Starbucks’ management said first-quarter fiscal 2026 results show the “Back to Starbucks” strategy is gaining traction sooner than expected, with sales improving as more customers return and visit often. The company is confident this momentum will translate into sustainable earnings growth and support long-term profitability.

Discussion on Q1 Earnings, Revenues & Comps of SBUX

In the fiscal first quarter, the company reported earnings per share (EPS) of 56 cents, missing the Zacks Consensus Estimate of 58 cents. The bottom line also decreased 19% from 69 cents reported in the prior-year quarter.

Net revenues of $9.91 billion beat the consensus mark of $9.64 billion. The reported value was up 5.5% year over year.

Global comparable store sales increased 4% year over year. The upside was backed by a 3% increase in comparable transactions and a 1% increase in average ticket.

During first-quarter fiscal 2026, the company added 128 net new locations, bringing the total store count to 41,118, with 52% operated by it and 48% run by licensed partners.

Starbucks’ Overall Margin Contracts in Q1

The company’s non-GAAP operating margin contracted 180 basis points (bps) to 10.1% from the prior-year quarter. This was largely due to increased labor spending to support the “Back to Starbucks” strategy, along with inflationary headwinds stemming from tariffs and higher coffee costs.

SBUX’s Segmental Details

Starbucks has three reportable operating segments: North America, International and Channel Development.

North America: The segmental net revenues were $7.28 billion, up 3% year over year. Its comparable store sales rose 4% against a decline of 4% in the prior-year quarter. Average transactions increased 3%, whereas the change in tickets rose 1% year over year.

Operating margin contracted 480 bps to 11.9% from 16.7% in the prior-year quarter.

International: This segment’s net revenues of $2.06 billion increased 10% year over year. Comparable store sales increased 5% in contrast to a 4% fall reported in the prior-year quarter. Average transactions increased 3%, whereas the change in tickets fell 2% year over year.

Operating margin expanded 100 bps year over year to 13.7%. The improvement was mainly supported by sales leverage and reduced store operating as well as depreciation and amortization expenses, following the classification of Starbucks’ China retail assets as held for sale and the halt of related depreciation. These benefits were partly offset by restructuring charges tied to store closures and ongoing inflationary pressures, largely from higher coffee costs.

In the fiscal first quarter, comps in China were up 7% against a 6% decline reported in the prior-year quarter. Transactions rose 5%, whereas the change in tickets was up 2% year over year.

Channel Development: Net revenues in the segment increased 20% year over year to $522.7 million. The upside was driven by an increase in contributions to the Global Coffee Alliance.

Operating margin declined to 41.3% from 47.7% a year earlier, mainly due to an unfavorable sales mix and higher global product costs, though this was partly cushioned by higher income from the North American Coffee Partnership joint venture.

SBUX’s Financial Details

The company ended the fiscal first quarter with cash and cash equivalents of $3.41 billion compared with $3.22 billion at the end of Sept. 28, 2025. As of Dec. 28, long-term debt totaled $14.6 billion, almost flat compared with Sept. 28, 2025.

Meanwhile, management declared a quarterly cash dividend of 62 cents per share. The dividend is payable on Feb. 27, 2026, to its shareholders of record as of Feb. 13.

Fiscal 2026 Outlook of SBUX

Starbucks has outlined its expectations for fiscal 2026, signaling steady growth and gradual margin improvement. The company anticipates global and U.S. comparable store sales to rise at least 3%, with overall net revenues increasing at a similar pace. Management also expects a modest year-over-year expansion in non-GAAP operating margin.

Non-GAAP earnings per share are projected to be between $2.15 and $2.40. In terms of expansion, Starbucks plans to open roughly 600 to 650 net new coffeehouses worldwide across both its company-operated and licensed formats.

SBUX’s Zacks Rank

Starbucks currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the Zacks Retail-Wholesale sector are BJ's Restaurants, Inc. (BJRI Quick QuoteBJRI - Free Report) , Brinker International, Inc. (EAT Quick QuoteEAT - Free Report) and Yum China Holdings, Inc. (YUMC Quick QuoteYUMC - Free Report) .

BJ's Restaurants currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BJ's Restaurants has gained 15.8% in the past six months. The Zacks Consensus Estimate for BJ's Restaurants' fiscal 2026 sales and EPS indicates a rise of 2.4% and 3.3%, respectively, year over year.

Brinker presently carries a Zacks Rank #2. The stock has declined 1.4% in the past six months.

The Zacks Consensus Estimate for EAT’s 2026 sales and EPS implies growth of 6.5% and 16.6%, respectively, from the year-ago levels.

Yum China presently carries a Zacks Rank #2. The stock has gained 7.9% in the past six months.

The Zacks Consensus Estimate for Yum China’s 2026 sales and EPS indicates an increase of 6.5% and 15.5%, respectively, from the year-ago levels.