Starbucks Corporation (SBUX Quick QuoteSBUX - Free Report) reported mixed third-quarter fiscal 2026 results, with adjusted earnings beating the Zacks Consensus Estimate but net revenues missing the same. Following the release, shares gained 4.3% in the post-market trading session as management raised its fiscal 2026 guidance.

Adjusted earnings of 85 cents per share topped the consensus estimate of 66 cents by 28.8% and increased 70% year over year. Net revenues of $9.32 billion missed the consensus mark of $9.44 billion by 1.22% and declined 1.4%. Global comparable store sales increased 7.9%, driven by transaction and ticket growth.

SBUX’s Margins Expand Despite Restructuring Costs

Starbucks’ GAAP operating income increased 4.8% year over year to $980.4 million. GAAP operating margin expanded 60 basis points to 10.5%, supported by sales leverage and lower inflation paired with tariff refunds.

Starbucks Corporation Price, Consensus and EPS Surprise

Starbucks Corporation price-consensus-eps-surprise-chart | Starbucks Corporation Quote

These benefits were partially offset by higher restructuring costs and labor investments largely tied to the “Back to Starbucks” plan. Restructuring and impairment expenses increased to $302.6 million from $20.8 million in the prior-year quarter.

On a non-GAAP basis, operating margin expanded 430 basis points year over year to 14.4%. Product and distribution costs declined 4.3%, while depreciation and amortization expenses decreased 15.4%. General and administrative expenses fell 11.6%.

Starbucks North America Gains on Higher Traffic

North America remained Starbucks’ largest revenue contributor. Segment net revenues increased 6.8% year over year to $7.40 billion, primarily reflecting growth in company-operated store revenues.

Comparable store sales rose 8.1%, driven by a 4.5% increase in comparable transactions and a 3.5% rise in average ticket. The company attributed the improvement to higher delivery sales and strength in customer food attachment and beverage modifications.

North America’s operating income increased 9.8% to $1.01 billion from $918.7 million. Operating margin expanded 30 basis points to 13.6%, aided by sales leverage, lower inflation, tariff refunds and the comparison with Leadership Experience costs in 2025.

Higher restructuring expenses, labor investments supporting the company’s turnaround strategy and unfavorable product mix partly offset the segment’s profitability gains.

SBUX’s International Results Reflect China Shift

International segment net revenues declined 34.2% year over year to $1.32 billion. The decrease primarily reflected the conversion of Starbucks retail operations in China to a licensed joint venture model during the fiscal third quarter.

Comparable store sales grew 5.7%, supported by a 2.6% rise in transactions and a 3.1% increase in average ticket. Starbucks ended the quarter with 22,933 International stores, up 3% year over year.

International operating income declined 7.3% to $252.8 million. However, operating margin expanded 550 basis points to 19.1%, primarily benefiting from the transition of the China business to the licensed joint venture structure. Higher restructuring costs partly offset the margin improvement.

Starbucks’ Channel Development Business Accelerates

Channel Development posted strong fiscal third-quarter growth, with net revenues increasing 21.5% year over year to $587.9 million. This improvement was primarily driven by higher revenues from the Global Coffee Alliance.

Segment operating income increased 40.2% to $306.2 million from $218.4 million. Operating margin expanded 700 basis points to 52.1%, supported by tariff impacts, including refunds.

These benefits were partially offset by product mix shifts and lower income from the North American Coffee Partnership joint venture relative to segment revenue growth.

SBUX Strengthens Cash Position and Reduces Debt

Starbucks ended the quarter with cash and cash equivalents of $3.45 billion, up from $3.22 billion at the end of fiscal 2025. Long-term debt declined to $11.78 billion from $14.58 billion.

During the first three quarters of fiscal 2026, operating activities generated $3.60 billion in cash. Capital expenditures totaled $887.8 million, while cash dividends paid amounted to $2.12 billion.

The company used a portion of the China transaction proceeds to repurchase approximately $1.3 billion of outstanding senior notes through tender offers. Starbucks declared a quarterly dividend of 62 cents per share, payable Aug. 28, 2026, to shareholders of record as of Aug. 14.

Starbucks Raises Fiscal 2026 Earnings Outlook

Starbucks raised its fiscal 2026 outlook following stronger comparable-sales and margin performance. The company now expects full-year U.S. comparable store sales growth slightly above 6%, compared with its previous forecast of at least 5%. Global comparable store sales growth is projected to approach 6%, up from the earlier expectation of at least 5%.

For the fiscal fourth quarter, SBUX expects U.S. comparable store sales growth of at least 6.5%. Consolidated net revenues are projected to remain flat or increase slightly year over year, while non-GAAP operating margin is expected to exceed 11%. Previously, management had called for year-over-year non-GAAP operating margin improvement without providing a specific threshold.

The company raised its adjusted earnings guidance to $2.55-$2.65 per share from the prior range of $2.25-$2.45. Starbucks maintained its plan to open approximately 600-650 net new coffeehouses globally across company-operated and licensed businesses.

SBUX’s Zacks Rank

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

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