Starbucks' Sales Rebound Outruns Its China Revenue Reset

Starbucks ended fiscal 2026 with a clearer operating recovery than its 4% revenue decline suggests. Fourth-quarter revenue fell to $9.1 billion largely because the company converted its China retail operation to a licensed joint venture, while global comparable coffeehouse sales rose 7.2%.

The sales mix matters. U.S. comparable sales increased 7.7%, driven by a 5.2% increase in average ticket and a 2.4% rise in transactions. North American transactions grew 2.7%. That means the improvement was not solely a price story, although customers still paid more per visit than a year earlier.

Profitability also improved. Starbucks reported GAAP earnings of $0.59 per share and non-GAAP earnings of $0.80, with the adjusted figure up 54%. GAAP operating margin reached 10.8%, while non-GAAP operating margin expanded to 14.0%. The distinction is important because restructuring and the China transaction affected the reported comparison.

Management continued to reshape the store base. Starbucks closed about 250 company-operated North American coffeehouses during the quarter because they did not meet its experience or financial standards. It still opened 303 net new coffeehouses globally and ended the period with 41,607 locations. The closures may improve average store economics, but they also show that the turnaround includes contraction as well as growth.

Fiscal 2027 guidance sets a higher bar. Starbucks expects North American comparable sales to grow about 4%, non-GAAP operating margin of 13.5% to 14.0%, and non-GAAP earnings of $3.15 to $3.25 per share. It plans roughly 1,200 net new coffeehouses. Reported revenue is expected to decline about 1%, mainly because China is now a licensed joint venture, even though fiscal 2027 contains a 53rd week worth about $700 million of revenue.

The key investor question is whether transaction growth can persist as price increases moderate. The fourth quarter supplied encouraging evidence: U.S. traffic improved, margins widened and adjusted earnings exceeded the level cited by the original report. Yet the 2027 revenue decline and store closures make headline growth less useful than comparable transactions, operating margin and cash returns.

Starbucks said it plans to resume share repurchases in fiscal 2027 and raised its quarterly dividend to $0.63 per share. Those commitments increase the importance of converting the sales recovery into durable free cash flow.