Starbucks Reports $9.9 Billion Revenue in Q1 Fiscal 2026, Faces Profit Decline

Starbucks Corporation reported its financial results for the first quarter of fiscal 2026, revealing a total net revenue of $9.9 billion, a 5.5% increase from $9.4 billion in the same quarter of the previous year. The growth was primarily driven by a $403 million increase in revenue from company-operated stores, attributed to a 4% rise in comparable store sales, which included a 3% increase in transactions and a 1% increase in average ticket prices. Additionally, the company saw a $120 million increase in other revenues, largely from its Global Coffee Alliance with Nestlé.

Despite the revenue growth, Starbucks experienced a decline in profitability, with operating income falling to $890.8 million from $1.1 billion a year earlier, resulting in an operating margin of 9.0%, down from 11.9%. This contraction was largely due to increased labor costs associated with the "Back to Starbucks" strategy and inflationary pressures, particularly from elevated coffee prices and tariffs. The company also recorded restructuring and impairment charges of $88.1 million, primarily related to the closure of underperforming stores.

Starbucks continued to implement its "Back to Starbucks" strategy, which includes closing stores that do not meet profitability standards. In the first quarter, the company closed 165 stores, with the majority of closures in the International segment. The restructuring plan aims to streamline operations and enhance customer experience, with expectations of improved growth potential moving forward. The company also announced a joint venture with Boyu Capital to operate Starbucks retail in China, which is expected to close in early 2026. This partnership will convert 8,011 company-operated stores to licensed stores, allowing Starbucks to retain a 40% interest in the joint venture.

Operationally, Starbucks reported a slight increase in its store count, with a total of 41,118 stores globally, up from 40,576 a year prior. The company operated 11,078 company-operated stores in North America and 10,445 in the International segment. The company’s cash and investments totaled $3.9 billion as of December 28, 2025, reflecting a solid liquidity position. However, cash provided by operating activities decreased to $1.6 billion from $2.1 billion in the prior year, primarily due to lower net earnings and changes in working capital.

Looking ahead, Starbucks anticipates that macroeconomic pressures, including commodity costs, may ease in the latter half of fiscal 2026. The company plans to continue refining its operational strategies to drive sales growth and improve profitability. The restructuring efforts and the new joint venture in China are expected to enhance Starbucks' long-term growth trajectory, with a focus on delivering exceptional customer experiences and expanding its market presence.