Starbucks Q2 Earnings Show Sales Gain, Rising Costs
Starbucks Q2 earnings raised FY2026 EPS guidance to $2.25-$2.45 while rising costs and China JV restructure complicate margin recovery and positioning.
KEY TAKEAWAYS
- Consolidated revenue rose to $9.5 billion; global comparable-store sales increased 6.2%.
- EPS was $0.50, up 22.0% and first earnings growth in over two years.
- Raised FY2026 EPS guidance to $2.25-$2.45 while flagging rising costs and China deconsolidation that complicate margins.
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Starbucks (SBUX) reported Q2 FY2026 results on April 28, 2026, showing stronger comparable-store sales and raising full-year EPS guidance. Management said rising costs and China retail restructuring complicate a full margin recovery.
Sales Growth and Margin Expansion
Starbucks posted consolidated revenue of $9.5 billion for the quarter ended March 29, 2026, an 8.0% increase from a year earlier. Global comparable-store sales rose 6.2%, driven by transaction growth. U.S. comparable-store sales climbed 7.1%, with transactions up more than 4% and average ticket nearly 3% higher. North America revenue reached $6.9 billion, up 6.0% year over year.
Consolidated operating margin expanded 110 basis points to 9.4%, marking the first margin improvement since Q1 FY2024. International operating margin widened to 20.3%, boosted partly by about $118 million in reduced expenses and depreciation tied to held-for-sale accounting for China retail.
Earnings per share rose 22.0% to $0.50, the first EPS growth in more than two years. The company operated 41,129 stores globally as of March 29, adding 11 net locations in the quarter. The GROW scorecard showed a 30-point increase in stores achieving the 4+ star threshold, indicating stronger sales performance. Channel net revenues from the Global Coffee Alliance increased 38.0%, while cold-foam sales grew 40.0%.
CEO Brian Niccol said, "Q2 marked a significant step forward in our turnaround," highlighting progress from the Back to Starbucks strategy, which focuses on service improvements, menu innovation, and cost discipline.
Guidance, China Restructuring, and Cost Savings
Starbucks raised its FY2026 comparable-store sales guidance to 5.0% or better, led by the U.S., and set EPS guidance between $2.25 and $2.45. The company expects consolidated revenue to be roughly flat year over year and operating margin to show slight growth, assuming coffee prices and tariffs moderate in the second half.
Retail operations in China will deconsolidate starting in Q3 FY2026 and be reported as licensed stores. Management expects the planned joint venture to be margin accretive and neutral to FY2026 EPS.
The company remains on track for $2.0 billion in gross cost savings through FY2028, including product, distribution, operating expenses, and general and administrative costs. FY2026 G&A expenses are below FY2023 levels. Starbucks repaid $1.0 billion of February maturities and maintains a BBB+/Baa1 credit rating. Management also expects a return to net unit growth through international licensees.
The raised guidance and cost-savings program underpin management’s path to margin improvement, contingent on easing commodity and tariff pressures and the progress of the China restructuring.
