Starbucks' U.S. Recovery Is Real, but 2027 Sets a Harder Test

Starbucks ended fiscal 2026 with the clearest evidence yet that its U.S. turnaround is gaining traction. U.S. comparable coffeehouse sales rose 7.7% in the fourth quarter, driven by a 2.4% increase in transactions and a 5.2% increase in average ticket.

Traffic matters more than the headline sales number. Starbucks had relied heavily on price and mix during earlier phases of the recovery. A return to positive transactions suggests that product changes, delivery, rewards and store improvements are bringing more customers back rather than merely extracting more revenue from each visit.

Profitability also improved. The company reported GAAP operating margin of 10.8%, up 790 basis points from a year earlier, and non-GAAP operating margin of 14.0%, up 460 basis points. GAAP earnings per share were $0.59, while non-GAAP earnings per share reached $0.80. The original report noted that the adjusted result beat a $0.72 consensus estimate.

Some of the margin comparison reflects unusually high restructuring costs in the prior year. Starbucks also closed about 250 company-operated North American coffeehouses during the quarter after deciding that they did not meet its experience or financial standards. The U.S. store count ended at 16,781, down slightly from a year earlier.

International performance was weaker. Comparable sales increased 0.9%, as a 3.7% rise in average ticket was partly offset by a 2.8% decline in transactions. The sale of Starbucks China's retail operations into a licensed joint venture also reduced reported international revenue and makes year-over-year comparisons less direct.

Fiscal 2027 guidance sets a demanding next stage. Starbucks expects North American comparable sales growth of about 4%, non-GAAP operating margin of 13.5% to 14.0% and non-GAAP earnings per share of $3.15 to $3.25. The year will contain 53 weeks, with the extra week contributing slightly more than $0.10 of earnings per share.

The company plans about 1,200 net new coffeehouses globally, led by international licensed growth. It also declared a $0.63 quarterly dividend and said it plans to resume share repurchases in fiscal 2027. Those capital returns signal confidence, but they do not remove the operational test.

Bank of America raised its price target to $141 from $136, arguing that management's guidance may prove conservative. Jefferies kept a Hold rating and a $101 target, forecasting 3.3% North American comparable sales growth and a 13.2% operating margin, both below management's outlook.

That split captures the investment question. Starbucks has restored U.S. traffic and recovered margin, but the easiest year-over-year comparisons are fading. A durable recovery requires transaction growth to continue after the initial store upgrades, closures and promotional changes have worked through the numbers.