Executives are “trying to force customer connection by mandating that workers write messages on cups instead of just doing that willingly,” Baldwin said. “It totally slows down production. And it's really difficult and frustrating to have to stop short with every single drink you're making to write a message.” But baristas face discipline if they don’t write the messages, she said, including criticism for not being “authentic enough.”For workers like Baldwin, that connection was always part of the job — som ...

Starbucks 2024 Conference Call Summary Company Overview - **Company**: Starbucks Coffee Company - **Industry**: Coffee and Beverage Retail - **Global Presence**: Operates over 41,000 coffee houses in 90 markets, serving more than 20 billion customer occasions annually with over 85 million active Starbucks Rewards members [19][39] Core Points and Arguments Growth Strategy - **Back to Starbucks Plan**: A strategic initiative aimed at reconnecting with core values and enhancing customer experience, focusing on service quality and operational efficiency [26][27] - **Financial Projections**: Anticipates 3% global and U.S. comp growth over the next three years, with consolidated net revenues growing by 5% or more in fiscal 2028 [38][39] - **New Store Openings**: Plans to add over 2,000 net new coffee houses globally, including approximately 400 new U.S. company-operated locations annually by fiscal 2028 [39] Customer Experience - **Green Apron Service**: A significant investment in customer experience, improving staffing and service standards across all stores [27][28] - **Third Place Concept**: Emphasizes creating welcoming environments for customers, enhancing community connection and customer satisfaction [15][29] - **Digital Engagement**: The largest digital business in the coffee sector, driven by a robust app and rewards program, enhancing customer convenience and engagement [22] Product Innovation - **1971 Roast Launch**: Introduction of a new dark roast coffee blend, expected to be available in all stores by early 2024 [13][10] - **Menu Expansion**: Plans to introduce new beverage options, including a dedicated Matcha menu and Energy Refreshers, to cater to evolving customer preferences [49][50] - **Food Offerings**: Expansion of bakery items and afternoon snack options to create new customer occasions and drive sales [51][48] Operational Efficiency - **Technology Integration**: Implementation of AI-driven tools like Smart Queue and Green Assist to optimize operations and enhance customer service [28][69] - **New Equipment**: Introduction of the Mastrena III espresso machine, expected to improve efficiency and quality in beverage preparation [68][69] Community and Partner Engagement - **Partner Benefits**: Competitive pay and comprehensive benefits, including tuition assistance and family leave, contributing to low turnover rates and high partner satisfaction [63][64] - **Community Impact**: Commitment to positively impacting neighborhoods where Starbucks operates, reinforcing the brand's community-oriented approach [18] Additional Important Insights - **Brand Loyalty**: The Starbucks Rewards program has shown significant engagement, with members visiting more than four times a week on average, contributing to over $13 billion in revenue [54] - **Cultural Relevance**: The brand aims to stay relevant by engaging in cultural conversations and leveraging social media to connect with customers [44][45] - **Market Leadership**: Starbucks is recognized as the leading coffee brand, with a strong presence in both retail and digital spaces, setting it apart from competitors [59] This summary encapsulates the key points discussed during the Starbucks 2024 conference call, highlighting the company's strategic direction, operational improvements, and commitment to enhancing customer and partner experiences.

Starbucks (NasdaqGS:SBUX) Q1 2026 Earnings call January 28, 2026 08:00 AM ET Company ParticipantsBrian Niccol - Chairman and CEOCatherine Park - VP of Investor RelationsCathy Smith - CFOChris O'Cull - Managing DirectorDavid Palmer - Senior Managing DirectorDavid Tarantino - Director of ResearchJohn Ivankoe - Managing Director of Equity ResearchPeter Saleh - Managing DirectorZach Fadem - Managing DirectorConference Call ParticipantsBrian Harbour - Equity Research AnalystDanilo Gargiulo - Equity Research Anal ...

Financial Data and Key Metrics Changes - In Q1 fiscal year 2026, global revenue increased by 5% to $9.9 billion, with operating margins at 10.1% and EPS at $0.56, down 19% from the prior year [5][18][24] - North America revenue grew 3% to $7.3 billion, with comparable store sales also increasing by 4% [5][19] - International segment revenue rose by 10% to $2.1 billion, with comparable sales growth of 5% [13][21] Business Line Data and Key Metrics Changes - North America saw a 4% increase in comparable store sales, driven by a 3% growth in transactions [5][19] - The U.S. company-operated transaction comps grew year over year for the first time in eight quarters, with Starbucks Rewards' active members reaching 35.5 million [6][20] - The international segment's comparable store sales in China grew by 7%, marking the third consecutive quarter of growth [13][22] Market Data and Key Metrics Changes - The U.S. licensed store portfolio revenue declined due to ongoing trends in grocery and retail channels, but growth was noted in business, college, and healthcare segments [21] - The international segment's growth was supported by strong performance in major markets like China, Japan, and the U.K. [21][22] Company Strategy and Development Direction - The company is focused on its "Back to Starbucks" plan, aiming for sustained growth and profitability through disciplined execution [4][5] - Strategic investments are being made to enhance operational foundations, with a focus on technology and supply chain improvements [8][19] - The company plans to open approximately 600-650 net new coffeehouses in fiscal 2026, with a significant portion in China [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround strategy, noting that top-line growth is expected to lead to improved margins and earnings [4][16] - The company anticipates that pressures from product and distribution cost inflation will begin to ease as the fiscal year progresses [23][29] - The outlook for fiscal 2026 includes expectations for 3% or better global comparable sales growth [27][30] Other Important Information - A joint venture with Boyu Capital was announced to enhance Starbucks' potential in China, with expectations to close the deal in spring 2026 [24][25] - The company has reduced its menu by approximately 25-30% to streamline offerings and focus on health and wellness platforms [78] Q&A Session Summary Question: North America traffic performance and Green Apron service model - Management noted that North America comp results were driven by transactions, with about 0.5 points attributed to sales transfer from closed stores [36] Question: Additional cost opportunities - The company is tracking down about $2 billion in costs over the next two years, focusing on efficiency across the P&L [41] Question: Earnings guidance for fiscal 2026 - Higher-end guidance is contingent on maintaining strong comp performance, supported by effective execution of the Green Apron service model [44][46] Question: Same-store sales momentum and non-rewards member growth - Management emphasized the importance of engaging both rewards and non-rewards customers, with a focus on broad marketing and menu innovation [48][50] Question: Afternoon execution opportunities - The company plans to enhance afternoon offerings with more relevant beverages and food, leveraging digital menu boards for better customer engagement [54][55]

Core Viewpoint - Starbucks Corp. is preparing to report its first-quarter fiscal 2026 earnings on January 28, with CEO Brian Niccol's "Back to Starbucks" strategy facing scrutiny due to rising operational costs that may lead to a stock correction [1] Earnings Expectations - Wall Street anticipates Starbucks to report earnings per share (EPS) of $0.58, a decrease from $0.69 in the same quarter last year, despite a projected revenue increase to $9.64 billion [2] - Jefferies analyst Andy Barish has reiterated an "Underperform" rating with a price target of $75, describing the stock's recent performance as an "unsupported rally" [2] Operational Challenges - The "Green Apron Service" standard, implemented in August 2025, aims to enhance customer service through increased staffing and better order sequencing, but its impact will be felt in the first quarter [3] - Jefferies highlights that the costs associated with labor reinvestment and the rollout of Assistant Store Managers will challenge margins in the first half of the year [4] Revenue Strategy - CFO Cathy Smith has indicated that the company plans to prioritize revenue growth over immediate earnings, acknowledging that investments will pressure near-term profits [5] - The company is counting on strong holiday sales, particularly from returning seasonal items like the Eggnog Latte, to meet revenue targets [5] Analyst Sentiment - Bank of America maintains a "Buy" rating with a raised price target of $114, citing long-term growth potential in China despite current economic challenges [6][8] - Mizuho advises a neutral stance, suggesting investors wait for clearer long-term financial targets expected at the upcoming Investor Day [10] Stock Performance - Starbucks shares have increased by 12.57% over the last month and 14.72% year-to-date in 2026, although they are down 3.69% over the past year [11]

Core Insights - Starbucks Corporation (SBUX) shows early signs of stabilization entering fiscal 2026, with its future dependent on sustaining comparable sales momentum and managing ongoing inflationary pressures, particularly in coffee costs [1][10] Financial Performance - The company concluded fiscal 2025 with its first positive global comparable sales growth in seven quarters, attributed to improved U.S. traffic trends and strong international performance, including growth in China [2] - Starbucks anticipates continued comparable sales growth throughout fiscal 2026, although management acknowledges that recovery may not be linear [4] Operational Strategy - A significant factor in Starbucks' performance will be the implementation of the Green Apron Service, which focuses on staffing, speed, and customer connection, showing early positive results in U.S. stores [3] - The company is enhancing service execution, particularly during morning hours, and plans to introduce new menu items to support transaction growth and premium offerings [4] Cost Management - Persistent coffee inflation and tariffs are expected to pressure margins, with elevated coffee prices likely affecting profitability through at least the first half of fiscal 2026 [5] - Starbucks is restructuring general and administrative costs and improving unit economics by closing underperforming stores, although earnings may lag behind revenue growth due to labor investments [5] Competitive Landscape - Competition from McDonald's (MCD) and Dutch Bros (BROS) is significant as Starbucks seeks to strengthen its comparable sales and manage coffee cost inflation [7] - McDonald's McCafé platform is gaining popularity among value-seeking consumers, while Dutch Bros is rapidly expanding in the specialty beverage market, posing challenges to Starbucks [8] Valuation Metrics - Starbucks shares have increased by 0.9% over the past six months, contrasting with a 9.7% decline in the industry [9] - The company trades at a forward price-to-sales ratio of 2.54, which is below the industry average of 3.39 [13] Earnings Estimates - The Zacks Consensus Estimate for Starbucks' fiscal 2026 and 2027 earnings per share (EPS) suggests year-over-year gains of 16.9% and 23.6%, respectively, although EPS estimates have declined in the past 30 days [15]

Financial Data and Key Metrics Changes - Consolidated revenue for Q4 was $9.6 billion, reflecting a 5% increase year-over-year, driven by 2% net new company-operated store growth and a 1% increase in global comparable store sales [23][24] - Earnings per share (EPS) for Q4 was $0.52, down 34% from the prior year, primarily due to investments in the business and restructuring costs [28][29] - Consolidated operating margin was 9.4%, contracting 500 basis points from the prior year, mainly due to inflation and investments in labor [28][29] Business Line Data and Key Metrics Changes - U.S. comparable store sales were flat year-over-year, with ticket up 1%, reflecting fewer discount-driven offers [23] - International segment reported 9% year-over-year net revenue growth in Q4, reaching over $2 billion, with strong performance in China, Japan, the U.K., and Mexico [25][26] - The delivery business in the U.S. grew nearly 30% year-over-year in Q4, surpassing $1 billion in sales for the full fiscal year [10] Market Data and Key Metrics Changes - North America company-operated comparable store sales improved to flat year-over-year, with positive comp growth in Canada [6][23] - Starbucks China achieved 2% comparable store sales growth in Q4, driven by a 9% improvement in comparable transactions [25][26] - The international segment's revenue reached an all-time high of $7.8 billion for the fiscal year [15] Company Strategy and Development Direction - The company is focused on its "Back to Starbucks" strategy, emphasizing customer connection and craft, while also innovating across various access points [5][39] - Investments are being made in staffing and operational hours to enhance customer experience and service speed [9][10] - The company is piloting a new coffee house prototype with lower build costs and optimized space utilization [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround strategy, noting that Q4 marked the first quarter of global comparable sales growth in seven quarters [32] - The holiday season is anticipated to be a significant opportunity for the company, with a focus on delivering a warm and welcoming customer experience [17] - Management acknowledged the challenges posed by inflation and dynamic coffee prices but remains optimistic about long-term growth potential [66][68] Other Important Information - The company closed 107 net stores globally as part of its restructuring efforts, which are expected to be slightly accretive to profitability [29][30] - The company plans to continue its disciplined capital deployment and improve profitability of new coffee houses [30][31] - The company announced an increase in its quarterly dividend, marking the 15th consecutive year of increases [33] Q&A Session Summary Question: Concerns about the "Back to Starbucks" strategy - Management clarified that the strategy is comprehensive and aims to enhance customer connection and craft across all service channels, not just in-cafe [36][39] Question: Feedback on the Protein Platform and pricing - Management reported positive feedback on the Protein Platform, with customers appreciating the customization and value it offers [42][44] Question: Progress of the Green Apron Service model - Management indicated that the Green Apron Service is building momentum, with initial pilot stores outperforming others, and expects continued improvement as teams adapt [49][51] Question: Impact of store closures on profitability - Management stated that closures were based on customer experience viability and financial performance, and they expect some sales transfer to nearby stores [70][72] Question: Future pricing strategies and value perceptions - Management emphasized a strategic approach to pricing, monitoring value perception closely while navigating inflation challenges [80][81]

Financial Data and Key Metrics Changes - The company reported consolidated revenue of $9.6 billion for Q4, reflecting a 5% increase year-over-year, driven by 2% net new company-operated store growth and a 1% increase in global comparable store sales [23][24] - Earnings per share (EPS) for Q4 was $0.52, down 34% from the prior year, primarily due to inflation and investments in the Back to Starbucks strategy [29][33] - The consolidated operating margin for Q4 was 9.4%, contracting 500 basis points from the prior year, mainly due to inflation and increased labor costs [28][29] Business Line Data and Key Metrics Changes - U.S. comparable store sales were flat year-over-year, with ticket prices up 1%, reflecting fewer discount-driven offers [23][24] - The international segment reported a 9% year-over-year net revenue growth in Q4, reaching over $2 billion, with strong performance in China, Japan, the U.K., and Mexico [25][26] - The channel development segment saw a 16% year-over-year revenue growth due to higher revenue from the Global Coffee Alliance [27] Market Data and Key Metrics Changes - The international business ended the year with record revenues of $7.8 billion, opening 316 net new coffee houses in Q4, totaling over 900 for fiscal 2025 [15] - Starbucks China achieved 2% comparable store sales growth in Q4, driven by a 9% improvement in comparable transactions [25][26] - The U.S. licensed store portfolio revenue declined in Q4, primarily due to trends in grocery and retail channels, while travel segments showed positive growth [24][25] Company Strategy and Development Direction - The company is focused on its "Back to Starbucks" strategy, emphasizing customer connection and craft, with significant investments in staffing and service standards [5][8] - The rollout of the Green Apron Service aims to enhance customer experience and operational efficiency, with positive early results observed [9][10] - The company is piloting a new coffee house prototype to optimize space utilization and reduce build costs while maintaining a full coffee house experience [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround strategy, noting the first positive quarter in global comparable store sales in seven quarters [6][22] - The holiday season is anticipated to be a significant opportunity for growth, with a focus on delivering a warm and welcoming customer experience [16][17] - The company acknowledges ongoing challenges with inflation and commodity prices but remains optimistic about long-term growth potential [28][32] Other Important Information - The company completed 107 net store closures globally as part of its restructuring efforts, which are expected to be slightly accretive to profitability [30][31] - The company plans to continue investing in Green Apron Service and menu innovation to drive customer engagement and transaction growth [19][20] Q&A Session Summary Question: Concerns about the "Back to Starbucks" strategy - Management clarified that the strategy is comprehensive and aims to enhance customer connection and craft across all service channels, not just in-cafe experiences [36][39] Question: Feedback on the Protein Platform - The Protein Platform has received positive feedback, with customers appreciating the customization options and perceived value [42][46] Question: Progress of the Green Apron Service model - Management noted that the initial rollout has shown positive results, with ongoing improvements expected as staff and customers adapt to the new service standard [49][51] Question: Impact of store closures on profitability - Management indicated that closures were based on the inability to meet customer experience standards and profitability, with expectations of sales transfer to nearby locations [70][72] Question: Future pricing strategies - The company plans to be strategic with pricing, monitoring value perception while addressing inflationary pressures [80][81]

Core Insights - Starbucks' CEO Brian Niccol indicated that price changes are a last resort in his revitalization efforts, but he does not rule them out as necessary for the company's future [1][2] - The "Back to Starbucks" campaign is reportedly ahead of schedule, focusing on improving customer service and overall experience [1][11] Financial Performance - Starbucks reported a 2% decline in global comparable store sales, driven by a 2% decrease in comparable transactions, partially offset by a 1% increase in average ticket price [4] - The company's revenue increased by 4% to $9.5 billion, surpassing analysts' expectations, but adjusted EPS fell 46% year-over-year to $0.50, missing estimates of $0.65 [5] Strategic Initiatives - Niccol's turnaround strategy emphasizes customer service, with the introduction of the Green Apron Service model aimed at enhancing consumer connection and improving sales [10][11] - Changes in-store include remodeling for comfort, reintroducing self-serve condiment bars, and personalizing to-go orders with handwritten messages [12] Market Response - Following the earnings call, Starbucks' stock rose over 3.5% in after-hours trading, indicating a positive market reaction despite mixed financial results [5]

Financial Data and Key Metrics Changes - Total company net revenue for Q3 was $9.5 billion, reflecting a 3% increase year-over-year, driven by 6% net new company-operated store growth, partially offset by a 2% decline in comparable store sales [40][41] - Global operating margin was 10.1%, a decrease of 650 basis points from the prior year, primarily due to deleverage and investments in the Back to Starbucks strategy [49] - Earnings per share (EPS) for Q3 was $0.50, down 45% from the prior year, mainly reflecting the impact of expense deleverage and investments [50] Business Line Data and Key Metrics Changes - In North America, comparable sales declined by 2%, with the U.S. experiencing a transaction comp decline of less than 4% [40][41] - Canada reported low single-digit sales comp growth, driven by product innovation, particularly in food [44] - The international segment achieved over $2 billion in quarterly revenue for the first time, with strong performance in the UK and Mexico [28][45] Market Data and Key Metrics Changes - Starbucks China's comparable store sales grew by 2%, driven by a 6% improvement in comparable transactions, supported by successful product innovation and marketing campaigns [46][28] - The UK and Mexico showed positive comparable sales performance, while Japan faced challenges with negative comparable sales due to soft consumer sentiment [31][46] Company Strategy and Development Direction - The company is focused on the "Back to Starbucks" strategy, which aims to enhance customer service and operational efficiency, with significant investments in the Green Apron service model [5][14] - Plans include a comprehensive evaluation of the coffee house portfolio to ensure alignment with brand and customer expectations, targeting at least 1,000 uplifts across North America by the end of 2026 [20][21] - The company aims to innovate its menu and enhance the Starbucks Rewards program to better recognize customer loyalty and engagement [86][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround strategy, noting early signs of progress in partner engagement and customer satisfaction [8][12] - The company anticipates that investments in labor and operational improvements will yield healthier margins over time, with a focus on disciplined capital deployment [54][53] - Management acknowledged the dynamic environment regarding coffee prices and tariffs but remains optimistic about future growth opportunities [52][53] Other Important Information - The company plans to hold an Investor Day in early 2026 to provide insights into long-term strategies and performance expectations [66][68] - The Green Apron service model is set to roll out across all U.S. company-operated stores, aiming to standardize customer service and operational efficiency [14][72] Q&A Session Summary Question: Investment in stores and cost offsets - Management highlighted the importance of the Green Apron service as a foundational operating model and is working on cost structure efficiency across the P&L [58][59] Question: Long-term margin expectations - Management indicated that 2019 margins serve as a guidepost for future profitability, emphasizing the need to drive top-line growth first [65][66] Question: Green Apron service rollout - The Green Apron service model will begin rolling out mid-August, with expectations for gradual implementation across stores [71][72] Question: Marketing impact on transactions - Management noted improvements in marketing effectiveness and operational progress, contributing to increased transactions [78][79] Question: Food innovation opportunities - Management acknowledged successful food initiatives in Canada and plans to leverage successful food offerings globally [80][81]