Starbucks(US:SBUX) ZACKS·2026-01-09 18:32Core Insights - Starbucks Corporation (SBUX) is strategically reshaping its store base in North America, focusing on closures and portfolio pruning to enhance unit economics [1][4] - The company recorded a net decline of approximately 107 global company-operated store closures in fiscal Q4 2025, indicating a reassessment of its cafe portfolio [1][10] Store Closures and Operational Strategy - The stores selected for closure were underperforming and lacked a clear path to profitability, with expectations that operating margins will improve as lost sales shift to higher-productivity cafes [2][10] - The closures are part of a broader strategy to enhance unit-level economics and capital efficiency, with investments in targeted cafe renovations and lower-cost store prototypes [3][10] Focus on Portfolio Quality - Starbucks is emphasizing portfolio quality over quantity, aiming to rebuild traffic in key segments while maintaining a productive store base to improve profitability [4] - Management indicated that margin recovery will be gradual, but early improvements in comparable transactions support the operational reset aimed at strengthening unit-level profitability [4] Competitive Landscape - Starbucks' portfolio reset contrasts with the growth strategies of competitors like Dutch Bros Inc. and Chipotle Mexican Grill, which are focused on unit expansion despite current market challenges [5][6] - While Dutch Bros emphasizes unit growth with strong early productivity, Chipotle is accelerating development while managing softer traffic trends [5][6] Valuation and Earnings Estimates - Starbucks shares have declined 4.1% over the past year, compared to a 3.1% decline in the industry [8] - The company trades at a forward price-to-sales ratio of 2.56, below the industry average of 3.52 [12] - The Zacks Consensus Estimate for SBUX's fiscal 2026 earnings per share (EPS) implies an 8.9% year-over-year increase, although EPS estimates have declined in the past 30 days [14]