By Neil J Kanatt and Waylon Cunningham
April 28 (Reuters) – Starbucks raised its annual forecasts as CEO Brian Niccol said investments in faster service and more staffing had lured customers back to the global coffee chain.
The company’s shares jumped about 5% in extended trading on Tuesday after it also beat expectations for second-quarter sales growth and profit.
“The shine is back on Starbucks around the world,” Niccol said on the earnings call Tuesday.
Niccol’s turnaround strategy, called “Back to Starbucks”, has focused on improving metrics like wait times and reported customer satisfaction, and has paired those goals with investments in additional staffing. The investments in labor are why despite increased sales, operating margins in the company’s core North American market declined to 9.9% from 11.6% the year before.
The world’s largest coffee chain reported a 6.2% increase in global same‑store sales for the second quarter, above analysts’ expectations of a 3.7% rise, according to data compiled by LSEG.
Starbucks forecast fiscal 2026 adjusted earnings per share of $2.25 to $2.45, up from its prior outlook of $2.15 to $2.40.
Annual global same‑store sales are expected to grow about 5% or more, exceeding earlier expectations of at least 3%.
“We believe this quarter reflects the turn in our turnaround, but we know there is more work to be done,” Niccol added. He noted that the effects of economic uncertainty have not shown up in consumer behavior, with positive sales trends continuing through April. Niccol said customers increased across all income cohorts as the chain offered a “little touch of luxury.”
Average consumer visits per Starbucks location rose 5.9% in the quarter, according to Placer.ai data.
About 80% of stores are hitting the 4-4-12 service targets – four minutes in the cafĂ©, four in the drive-through, and under 12 minutes for mobile pickup, Niccol said.
The company’s adjusted operating margin rose 120 basis points from a year ago to 9.4% in the quarter, while adjusted earnings per share of 50 cents beat analysts’ estimates of 43 cents.
The company said it expects certain pressures related to import tariffs and elevated coffee prices to alleviate in the second half of the fiscal year.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Sriraj Kalluvila and David Gregorio)
