Starbucks Earnings Preview: Transformation to Be Verified

After the market closed on April 28th Eastern Time, the global coffee chain giant Starbucks will release its financial report for the second quarter of the fiscal year 2026. This period is a crucial point for Starbucks' strategic transformation in the Chinese market. At the beginning of April, the company completed a joint venture transaction with Boyu Capital, giving up the controlling stake in the Chinese market for the first time in 27 years, and gradually transitioning its direct-operated stores to a franchise model. This financial report has become the core window to assess the effectiveness of the "return to Starbucks" strategy and the value of market transformation in China.

The U.S. Market: Divergent Expectations of Recovery, with Same-Store Sales as the Central Focus

According to analyst expectations compiled by Bloomberg, Starbucks' revenue for the second quarter is projected to be between $9.1 billion and $9.3 billion, with adjusted earnings per share expected to be between $0.59 and $0.65. Same-store sales growth is the core indicator affecting the market.

UBS Securities maintains an optimistic stance, raising the expectation for same-store sales growth in North America from 4% to 6%, far exceeding the general market expectations. They believe that menu innovation, operational efficiency improvements, loyalty program reforms, and marketing optimizations collectively drive improvements in both customer transaction value and transaction volumes. Jefferies is relatively cautious, having upgraded the company's rating from "underperform" to "hold," but believes that maintaining mid-single-digit growth for the U.S. business still faces significant challenges under macroeconomic pressures and fierce competition.<中国人民市场：Landed Franchising, "Thousand Stores, Thousand Faces" Strategy Kicks Off Expansion

The Chinese market is the biggest highlight of this financial report. On April 8th, Starbucks China released the "Thousand Stores, Thousand Faces" new strategy, planning to increase the coverage of county-level administrative regions from over 1000 to more than 1500 in the next three years, introducing flexible store formats such as mini-stores and coffee carts to fit various regional consumer scenarios.

More crucially, on April 2nd, the joint venture transaction between Starbucks and Boyu Capital was officially completed, marking the company's relinquishment of the controlling stake in the Chinese market and significantly reducing its international business risk exposure. Data from Jefferies shows that after the transaction, Starbucks' revenue and operating profit proportions from international operations have noticeably declined, falling below global fast-food peers such as McDonald's and Yum! Brands. The franchising model reduces capital investment and operational risks in the Chinese market, but the market is also closely monitoring whether the change in the model will affect brand consistency and operational efficiency.Financial Performance: Increased Revenue in the Previous Quarter but Decreased Profits, Chinese Market Maintains High Growth

In the first quarter of the fiscal year 2026, Starbucks' finances showed a pattern of "increased revenue but decreased profits." The total net income for the period was $9.915 billion, a year-on-year increase of 5.5%; operating profit was $891 million, a year-on-year decrease of 20.6%; and net income attributable to shareholders was $293 million, a significant year-on-year decrease of 62.4%. The decline in profits was mainly due to the "return to Starbucks" strategy increasing labor inputs, coupled with cost pressures from coffee prices and high tariffs.

The performance in the Chinese market continues to shine. The net income in the first quarter was $823 million, a year-on-year increase of 11%, achieving revenue growth for five consecutive quarters; same-store sales increased by 7%, with transaction volumes increasing by 5% and average customer transaction value increasing by 2%, keeping store operating profit margins at a healthy double-digit level.Institutional Opinions: Significant Disputes, High Valuation Triggers Market Concerns

There are significant differences in the views of major institutions on Starbucks. UBS has given a target price of $100, believing that improvements in fundamentals will bring about upward space; Jefferies has a target price of only $92, having upgraded the rating but remaining cautious about the high valuation.

Currently, Starbucks is trading at a price-to-earnings ratio of about 35 times, far higher than the global average of 21 times for franchised restaurant peers and also over the S&P 500 index valuation of about 22 times. Jefferies believes that with the current growth prospects, the high premium is not sustainable. Its forecasts for earnings per share in fiscal years 2026 and 2027 are below Wall Street consensus levels, and its expectations for same-store sales and operating profit margins are more conservative.