Earnings

Starbucks Restarts China Licensing as Fourth-Quarter Sales Slow

The Tip Desk · October 29, 2026 · 4 min read

Global comparable coffeehouse sales rose 7.2% in the 13 weeks ended Sept. 27, 2026, as ticket growth of 5.2% more than offset a 1.8% rise in transactions.

Starbucks Corporation (SBUX) reported global comparable coffeehouse sales growth of 7.2% in the 13-week fiscal fourth quarter ended Sept. 27, 2026, a slower pace than the 7.9% increase in the prior quarter. The mix shifted toward average ticket, which rose 5.2%, while comparable transactions increased 1.8%.

Consolidated net revenues fell 4% to $9.1 billion, including on a constant currency basis, after a 1% year-over-year decline to $9.3 billion in the third quarter. The company said the decrease was primarily driven by the conversion of Starbucks retail operations in China to a licensed joint venture model in the third quarter of fiscal 2026.

GAAP operating margin expanded 790 basis points year-over-year to 10.8%, which the company attributed primarily to lower restructuring costs and sales leverage. Non-GAAP operating margin was 14.0%, up 450 basis points on a constant currency basis. GAAP earnings were $0.59 a share, up 392% from a year earlier. Non-GAAP earnings were $0.80 a share, up 54%, including on a constant currency basis.

North America comparable coffeehouse sales increased 7.9%, down from 8.1% in the third quarter, with a 5.0% rise in average ticket and a 2.7% increase in comparable transactions. U.S. comparable coffeehouse sales rose 7.7%. North America net revenues were $7.3 billion, up 6% from a year earlier. Operating income was $898.4 million, and operating margin was 12.3%, up from 4.5% a year earlier. The company said the ticket increase was driven primarily by strength in product mix and customer food attach, pricing and higher delivery sales.

In September 2026, Starbucks closed approximately 250 company-operated North America coffeehouses under its “Back to Starbucks” strategy. North America coffeehouse count ended at 18,176. The company said it remains confident in its long-term growth opportunity in North America.

International comparable coffeehouse sales increased 0.9%, after 5.7% in the third quarter. Transactions fell 2.8% and ticket rose 3.7%. International net revenues were $1.3 billion, down 37% from a year earlier, which the company said was primarily driven by the China licensed joint-venture conversion, which lowered company-operated coffeehouse revenues and largely contributed to higher product sales to, and royalty revenue from, licensees. International operating income was $256.9 million, and operating margin was 19.7%, up from 10.8% a year earlier.

Channel Development net revenues were $494.4 million, down 9% from a year earlier, primarily due to a decrease in revenue in the Global Coffee Alliance. Operating income was $264.3 million, and operating margin was 53.5%.

The company opened 303 net new coffeehouses in the fourth quarter, ending the period with 41,607 coffeehouses, 32% company-operated and 68% licensed. U.S. coffeehouses comprised 40% of the global portfolio, with 16,781 locations.

For the 52-week fiscal year ended Sept. 27, 2026, global comparable coffeehouse sales increased 6.2%. Consolidated net revenues rose 2% to $37.9 billion, including on a constant currency basis. GAAP operating margin expanded 180 basis points year-over-year to 9.7%. The divestiture of Starbucks retail operations in China in the third quarter resulted in a pre-tax gain of $536.3 million. GAAP earnings were $2.21 a share, up 36%. Non-GAAP earnings were $2.72 a share, up 28%.

Chairman and Chief Executive Officer Brian Niccol said the company had a terrific quarter and a great year driven by a focus on fundamentals, and that “Back to Starbucks started as our turnaround plan. Now, it’s our growth plan.” Chief Financial Officer Cathy Smith said the company returned to comp growth, expanded margin and delivered stronger earnings in fiscal 2026, and intends to build on that progress in fiscal 2027.

The board declared a cash dividend of $0.63 a share, payable Nov. 27, 2026. The company said it plans to resume share repurchases in fiscal 2027.

Starbucks introduced fiscal 2027 guidance, a 53-week year, with consolidated net revenues expected to decline approximately 1% year-over-year, including about $700 million related to the 53rd week, primarily due to the China licensed joint-venture transition. North America comparable coffeehouse sales growth is guided at approximately 4.0%. Non-GAAP consolidated operating margin is guided at 13.5% to 14.0%, and non-GAAP earnings at $3.15 to $3.25 a share, including slightly more than ten cents related to the 53rd week. The company expects approximately 1,200 net new coffeehouses globally, led by International.

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