Key Takeaways:
- Q2 revenue rose 9% to $9.5B, with global comparable sales up 6.2%
- Operating margin expanded 110bps to 9.4%, first expansion since Q1 FY24
- FY26 EPS guidance raised to $2.25-$2.45 from $2.15-$2.40
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Starbucks raises EPS guidance as $2B cost-savings plan gains traction
Starbucks reported Q2 revenue of $9.5B, up 9%, and raised its full-year EPS guidance as a $2B cost-savings plan gains traction.
"The results reflect early progress on our Back to Starbucks strategy, with traffic returning to growth across all dayparts," the company said in its earnings release. Starbucks did not provide a named executive quote in the filing.
Global comparable sales increased 6.2% in the fiscal second quarter ended March 29, marking the company's strongest U.S. transaction growth in about three years. Consolidated operating margin expanded 110 basis points to 9.4%, the first expansion since the first quarter of fiscal 2024. Earnings per share rose 22% year over year to 50 cents, the first year-over-year earnings growth in more than two years.
Cost pressure remained visible in North America, where operating margin contracted 170 basis points to 10.2%. The decline reflected Green Apron Service investments, higher product and distribution costs, tariffs, elevated coffee prices and legal accruals. Those pressures were partially offset by progress on operating leverage and cost discipline.
Starbucks remains on track with its $2B gross cost-savings plan through fiscal 2028, with savings expected across product and distribution costs, operating expenses and general and administrative lines. The company expects near-term savings to show most clearly in G&A, with Back to Starbucks investments offsetting much of the realized savings across the P&L.
The company raised its fiscal 2026 EPS guidance to $2.25-$2.45 from a prior range of $2.15-$2.40, reflecting improved confidence in profit conversion. Starbucks expects slight year-over-year growth in consolidated operating margin for the full year, supported by sales leverage, cost-savings initiatives and easing coffee and tariff pressures in the back half of the year.
The Starbucks Rewards program reached a record high in active membership during the quarter, while new beverages including premium Matcha drinks and energy refreshers drove afternoon traffic gains. All of Starbucks' top international markets posted positive comparable sales growth, with China delivering transaction growth for the fourth consecutive quarter.
The guidance raise signals management expects the cost-savings plan to convert stronger sales momentum into durable earnings growth. Investors will watch the pace of margin recovery in North America and the impact of easing coffee costs in the second half of fiscal 2026.
This article is for informational purposes only and does not constitute investment advice.
