Core Insights - Starbucks reported strong top-line growth driven by transactions in Q1 of fiscal 2026, with a focus on improving margins and earnings over time [3][4] Financial Performance - North America revenue increased by 3% to $7.3 billion, with comparable store sales growing by 4% [2] - Global revenue rose by 5% to $9.9 billion, with comparable sales up by 4% and 128 net new stores opened [6] - International revenue increased by 10% to $2.1 billion, with comparable sales up by 5%, particularly strong in China [14] Strategic Initiatives - The "Back to Starbucks" turnaround plan and the rollout of the Green Apron service standard contributed to accelerating comparable sales growth and improving transaction trends [4][6] - Starbucks is investing in its in-store environment through the Coffeehouse Uplift program, with about 200 uplifts completed so far [11] Digital Engagement - Starbucks Rewards reached a record 35.5 million active members, with transactions growing year over year for the first time in eight quarters [12] - The company aims to enhance marketing strategies to appeal to both frequent and infrequent customers, focusing on engagement rather than discounting [13] Cost Management and Future Outlook - Starbucks plans to track down about $2 billion in costs over the next couple of years, focusing on G&A, procurement, and technology-driven efficiencies [20] - For fiscal 2026, the company targets global comparable sales growth of 3% or better, with net new stores expected to be around 600-650 [5][18] - EPS is projected to be between $2.15 and $2.40, with expectations for margin improvement in the latter half of the fiscal year [19]

Financial Data and Key Metrics Changes - In Q1 fiscal 2026, global revenue grew by 5% to $9.9 billion, with operating margins at 10.1% and EPS at $0.56, down 19% from the prior year [7][21][26] - North America revenue increased by 3% to $7.3 billion, with comparable store sales growth of 4% [7][22] - International segment revenue grew by 10% to $2.1 billion, with comparable store sales growth of 5% [16][24] Business Line Data and Key Metrics Changes - North America comparable store sales growth was driven by a 3% increase in transactions, with average ticket growing by 1% [22] - Starbucks Rewards' 90-day active members reached a record 35.5 million, with transactions from rewards members growing year-over-year for the first time in eight quarters [8][22] - The channel development segment reported a 19% increase in net revenues, driven by the Global Coffee Alliance and ready-to-drink business [24] Market Data and Key Metrics Changes - In the U.S., company-operated transaction comps grew year-over-year for the first time in eight quarters, with growth across all day parts [8] - China saw a 7% increase in comparable store sales, marking the third consecutive quarter of comp sales growth [16][24] - The company opened 79 net new international coffeehouses, with significant growth in markets like India and Latin America [17][18] Company Strategy and Development Direction - The company is focused on executing the "Back to Starbucks" plan, aiming for sustained growth and profitability [6][19] - Investments in technology and operational improvements are expected to enhance efficiency and customer experience [10][19] - The partnership with Boyu Capital aims to maximize Starbucks' potential in China, expanding into more cities and strengthening the brand [27][29] 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 [6][19] - The company anticipates that strategic investments will take time to yield sustainable earnings growth [10][19] - Management highlighted the importance of maintaining customer engagement and brand relevance through innovation and marketing [15][19] Other Important Information - The company plans to open approximately 600-650 net new coffeehouses in fiscal 2026, with a focus on both U.S. and international markets [30][31] - The effective tax rate for Q1 was 26.8%, higher year-over-year due to lapping discrete tax items [25] - The company expects consolidated operating margins to grow slightly year-over-year, driven by improvements in the latter half of the fiscal year [31] Q&A Session Summary Question: North America traffic performance and Green Apron Service impact - Management noted that North America comp results were driven by transactions, with about 0.5 points from sales transfer due to store closures [36][37] Question: Additional cost opportunities - Management outlined a plan to track down $2 billion in costs over the next two years, focusing on procurement and operational efficiency [43][44] Question: Earnings guidance for fiscal 2026 - The higher end of earnings guidance is contingent on maintaining strong comp performance and effective execution of the Green Apron Service model [46][47] Question: Same-store sales momentum and service vs. innovation - Management emphasized that a strong operating foundation enhances the effectiveness of marketing and innovation efforts [66][69] Question: Afternoon execution opportunities - Management acknowledged the potential for innovation in the afternoon daypart and plans to enhance menu offerings to meet customer needs [55][59]

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]