Starbucks rewards investors who have been betting the turnaround is taking hold

By Tomi Kilgore The stock rallies, as comparable-store sales rise again, and by the most in two years, to offset another profit miss Starbucks sees a second straight quarter of growth in sales of stores open at least a year, in a sign that the turnaround is taking shape. Shares of Starbucks rallied Wednesday, after the coffee chain reported quarterly growth in a key sales metric at the fastest rate in two years, in a sign that better times are ahead. While fiscal first-quarter profit came in below Wall Street forecasts, again, total revenue grew more than analysts were modeling, with particular strength in North America. The results come as investors have been banking on a turnaround, which has been in the works for nearly two years. The stock (SBUX) had run up 13.7% this month through Tuesday, toward its best monthly performance in a year. On Wednesday, the stock was up 1.8% in recent morning trading, which put it on track for the highest close since April 2, 2025. Comparable-store sales, or sales in stores open at least 13 months, rose 4% from the same period a year ago, marking the second straight quarterly increase after six consecutive quarters of declines. That beat the average analyst estimate compiled by FactSet of 2.3% growth. The growth was the result of a 3% rise in the number of transactions and a 1% increase in price. Comparable-store sales rose 4% in North America, and 5% internationally. And in another sign that customers were coming back, Chief Executive Brian Niccol said on the post-earnings call with analysts that 90-day active members of the Starbucks Rewards program reached a record 35.5 million customers during the quarter. He said rewards transactions increased for the first time in eight quarters, and non-rewards transactions grew even faster. "It is clear from our top-line results that our 'Back to Starbucks' plan is working and our turnaround is taking hold," Niccol said, according to an AlphaSense transcript. Top-line results refers to revenue. Total revenue grew 5.5% to $9.92 billion, beating the FactSet consensus of $9.65 billion. North America revenue was up 3% to $7.28 billion, above expectations of $7.19 billion, and international revenue was up 10% to $2.06 billion to top analyst forecasts of $2.01 billion. Meanwhile, net income dropped 62.4% to $293.3 million, weighed by a one-time tax and restructuring costs. Adjusted earnings per share, which excludes the nonrecurring items, fell to 56 cents from 69 cents, missing the FactSet EPS consensus of 59 cents. That was the fourth straight quarterly bottom-line miss, and the eighth miss over the past nine quarters. In 2026, the company sees comparable-store sales growth of 3% "or greater," which compares with the current FactSet consensus for a 3% rise. The company is projecting 2026 adjusted EPS of $2.15 to $2.40, while analysts were modeling for EPS of $2.35. The stock has lost 3% over the past 12 months, while the S&P 500 index SPX has advanced 15%. -Tomi Kilgore This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 01-28-26 1136ET