Shares of coffee retail giant Starbucks rallied 5 percent on Jan. 28 after the company’s “Back to Starbucks” strategy delivered a return to sales growth.
Starbucks had a 3 percent increase in customer traffic, its first rise in sales in two years. For the first time since 2022, both loyalty‑program members and non-members contributed to the growth.
Brian Niccol, CEO of Starbucks, attributed this growth to the “Back to Starbucks” initiative.
Shortly after he became CEO in September 2024, Niccol began employing measures to revitalize the brand and improve store operations and hospitality, effectively making its locations the “third place” experience.
These efforts could be paying off for the company.
“Our Q1 results demonstrate our ‘Back to Starbucks’ strategy is working and we believe we’re ahead of schedule,” Niccol said in a statement. “It’s great to see the sales momentum driven by more customers choosing Starbucks more often, and this is just the beginning.”
Net sales climbed 6 percent to $9.92 billion, buoyed by the second consecutive quarter of same-store sales growth. This also topped Wall Street’s expectations of $9.67 billion.
Starbucks also said it opened 128 more stores last quarter and plans to open more than 600 net new coffeehouses worldwide in the coming year.
Global same-store sales rose 4 percent—higher than the market estimate of 3 percent—as several key markets registered notable growth.
In the United States, same-store sales surged 4 percent, driven by its holiday product line, including the viral “bearista” cup, a glass cold cup shaped like a teddy bear.
China, the company’s second-largest market, posted a 7 percent boost in same-store sales.
Solid sales growth in China comes as Starbucks formed a joint venture with Boyu Capital in November to manage its China operations. The deal is still pending regulatory approval and is expected to be completed in the second quarter of fiscal year 2026.
Niccol specifically pointed to the “Green Apron Service”—a central pillar of his operating model—which was rolled out this past summer to enhance workflows, improve worker morale, and facilitate warm, engaging interactions between baristas and customers.
Despite upbeat earnings and a turnaround progressing, net income did not improve, coming in at $293.3 million, or 26 cents per share. This is down from $780.8 million, or 69 cents per share, a year earlier.
For months, the company has insisted it would not raise menu prices, despite soaring coffee prices.
While coffee markets have stabilized in recent months, Arabica futures had rocketed as much as 20 percent last year before paring most of their gains. The surge was in response to challenging growing conditions in Brazil and to President Donald Trump’s tariffs on the South American country. On Jan. 28, coffee fell to $3.52 a pound.
After accounting for impairment charges and restructuring costs, earnings per share of Starbucks were 56 cents, slightly below the market forecast of 59 cents.
Looking ahead, the company is projecting modest earnings.
In its first financial outlook in almost two years, the company forecasts adjusted earnings per share in a range of $2.15 to $2.40.
“With our ‘Back to Starbucks’ initiatives gaining traction, we have a clear line of sight to translating topline strength into sustainable earnings growth that positions us for long-term profitable growth,” Cathy Smith, chief financial officer, said in the earnings report.
Investor Optimism
Wall Street thinks Starbucks is on the right track, with shares rising more than 2 percent in the middle of the trading week.
Year-to-date, Starbucks shares are up 17 percent to around $98.
“It has started off the year on the right foot,” Jay Woods, chief market strategist at Freedom Capital Markets, said in an emailed note to The Epoch Times.
“Could this be the quarter that CEO Brian Niccol finally gets shares to break and stay above that $100 mark? It got there briefly after news of his arrival, but hasn’t since.”
Niccol’s predecessor, Laxman Narasimhan, was pushed out of the company after overseeing declining sales and traffic and eventually faced mounting pressure from shareholders. The company had recruited Niccol for his strong track record that includes resurrecting the Taco Bell brand and bolstering Chipotle’s operations.
Analysts maintain a “Moderate Buy” rating and an upside consensus price target of between 5 and 6 percent, according to MarketBeat.
Market watchers will pay close attention to Niccol’s appearance at an investor day event in New York City. The company is expected to dive deeper into its strategy and present long-term financial objectives on Jan. 29.
