Starbucks store sales up 7.2 percent as China sale trims revenue

What happened

Starbucks reported on Thursday 29 October that sales at its established coffeehouses were up 7.2 percent worldwide in its fiscal fourth quarter, which ended Sunday 27 September. ^{[1, 2]}

Consolidated net revenues were $9.1 billion, down 4 percent, which the company attributed mainly to turning its China stores into a licensed joint venture. Net earnings were $677.2 million, against $133.1 million a year earlier. ^[1]

Why it matters

The gain came mostly from bigger orders: average ticket, what a customer spends per visit, was up 5.2 percent, and transactions were up 1.8 percent. Operating margin, the share of revenue left as operating profit, was 10.8 percent against 2.9 percent a year before. The company credited lower restructuring costs and sales leverage. ^[1]

Where the sales came from

North America comparable sales, at coffeehouses open 13 months or longer, were up 7.9 percent, with ticket 5.0 percent higher and transactions 2.7 percent higher. In the US the gain was 7.7 percent. International comparable sales were up 0.9 percent: ticket was 3.7 percent higher and transactions 2.8 percent lower. ^[1]

International net revenues were down 37 percent to $1.3 billion after 7,991 company-operated coffeehouses in China became licensed ones; the release gives no separate China comparable sales figure. Reuters reported the joint venture is with Boyu Capital, in a deal valuing the business at $4 billion. ^{[1, 3]}

The company ended the quarter with 41,607 coffeehouses. In September it closed about 250 company-operated North America coffeehouses that it said fall short of the brand's expected experience and financial performance. Nation's Restaurant News reported 247 US closures in the quarter, while the release counts 212 US closures under the new plan and a net drop of 247 company-operated North America coffeehouses. ^{[1, 4]}

The year and the plan

For the fiscal year, net revenues were $37.9 billion, up 2 percent, and global comparable sales were up 6.2 percent. Net earnings were $2,526.7 million against $1,856.4 million, including a pre-tax gain of $536.3 million from the China divestiture. Operating margin was 9.7 percent, 180 basis points (hundredths of a percentage point) higher. ^[1]

'Back to Starbucks started as our turnaround plan,' chairman and chief executive Brian Niccol said in the release, adding that it is now the company's growth plan. For fiscal 2027, a 53-week year, the company expects net revenues about 1 percent lower, North America comparable sales about 4.0 percent higher and about 1,200 net new coffeehouses. Reuters reported a $1 billion share repurchase plan and a year focused on technology, including an AI system to help baristas take drive-through orders. ^{[1, 3]}

What settles it next

The declared quarterly dividend is payable Friday 27 November to holders of record on Friday 13 November, and the call's webcast replay runs until Friday 11 December. The 53rd week falls in the fourth quarter of fiscal 2027, the company said. ^[1]

Who it reaches

Starbucks (SBUX) is direct: the results are its own, filed on Form 8-K with the earnings release attached on Thursday 29 October. ^[2]