Starbucks Surges After Beating Forecasts and Raising Full-Year Outlook

Starbucks delivered a decisive win on Wednesday, reporting its fourth consecutive quarter of same-store sales growth and raising its full-year forecast, sending shares soaring as much as 9% in extended trading. The Seattle-based coffee giant’s momentum under CEO Brian Niccol became undeniable, with both earnings and revenue surpassing Wall Street’s expectations for the fiscal third quarter ended June 28.

The company now projects adjusted earnings per share in a range of $2.55 to $2.65 for fiscal 2026, a sharp increase from its prior outlook of $2.25 to $2.45 per share. Starbucks also lifted its global same-store sales growth forecast to nearly 6%, up from at least 5% previously, while U.S. same-store sales are now expected to climb more than 6%.

“This was the quarter our momentum became truly measurable,” Niccol said in a video shared with the company’s earnings press release.

For the fiscal third quarter, Starbucks reported adjusted earnings per share of 85 cents, crushing analyst estimates of 66 cents. Revenue reached $9.32 billion, topping the consensus forecast of $9.16 billion. Net income attributable to Starbucks surged to $1.05 billion, or 91 cents per share, up dramatically from $558.3 million, or 49 cents per share, in the year-earlier period.

Operating Margins Expand on Tariff Refunds

Operating margins expanded to 13.6% from 13.3% in the year-ago period, aided in part by tariff refunds that the company received during the quarter. While Starbucks did not disclose the exact amount of the refunds, CFO Cathy Smith clarified their significance on the earnings conference call.

“The refunds we received in Q3 largely offset related tariffs incurred in the first three quarters of fiscal 2026,” Smith said on the company’s earnings conference call.

Net sales dropped 1% to $9.3 billion due to the company’s sale of a controlling stake in its China business. In November, Starbucks announced it was forming a joint venture with Boyu Capital, which took over operations in the coffee chain’s second-largest market, with the transaction completed in April.

Same-Store Sales Growth Exceeds Expectations

Despite the overall revenue decline, Starbucks posted robust same-store sales growth that exceeded Wall Street’s projections. Sales at stores open at least 13 months climbed 7.9%, well above the 6% increase analysts had anticipated, according to StreetAccount. The 7.9% gain was consistent across both global operations and the U.S. market during the April-June period.

The coffee chain reported increases in both transactions and average check, demonstrating that customers are returning to its cafes and spending more on their orders. This dual driver of growth signals strengthening underlying demand rather than reliance on price increases alone.

Under Niccol’s “Back to Starbucks” strategy, the company has focused on improving service and making cafes more welcoming in its home market. To achieve this, Starbucks has invested in labor and renovations, added employees to stores during rush times, and used technology to better sequence in-store and mobile orders. The chain has also encouraged friendlier service and is redesigning stores and adding seating to create a cozier, coffeehouse atmosphere.

Turnaround Gains Traction Under Niccol

The results mark a clear validation of Niccol’s turnaround efforts since he took the helm. Fiscal second quarter 2026 had already shown promise, with revenue climbing to $9.531 billion, up 8.79% year over year, and global comparable-store sales rising 6.2% on 3.8% transaction growth. North America comparable sales rose 7.1%, while China was essentially flat at +0.5% comparable-store sales growth with a 1.6% decline in average ticket size.

“Our second quarter marked the turn in our turnaround as our Back to Starbucks plan drove both top and bottom line growth,” Niccol stated on an earlier call.

Starbucks has also slowed its expansion pace as part of its restructuring plan, opening just 11 net new stores in the second quarter while closing 62 locations. This more disciplined approach contrasts with previous rapid expansion strategies and reflects a focus on optimizing existing locations over sheer footprint growth.

Dividend Remains Intact Amid Turnaround Costs

For income investors, Starbucks continues to pay a quarterly dividend of $0.62 per share, with the next ex-date on August 14, 2026, and payment on August 28, 2026. The yield stands near 2.4% at a share price of $103.65, marking 64 consecutive quarters of payouts with a historical compound annual growth rate of roughly 17%.

However, dividend coverage remains a concern for some analysts. Free cash flow covered the dividend at 0.88x in fiscal 2025, down from 1.28x in fiscal 2024, and shareholders’ equity stands at negative $8.458 billion. Management suspended share buybacks in fiscal 2025 after repurchasing $1.27 billion in fiscal 2024, effectively prioritizing the dividend over returning capital through buybacks.

Wall Street Outlook and Investor Sentiment

Shares jumped nearly 8% in after-hours trading Wednesday following the earnings release. The consensus analyst price target sits at $106.45, only modestly above the current share price, suggesting Wall Street remains measured despite the strong quarterly performance. Polymarket traders assigned a 92.5% probability to a third-quarter earnings beat prior to the announcement.

Valuation metrics remain elevated, with a trailing price-to-earnings ratio of 79x and a forward P/E of 35x. The high multiples reflect investor confidence in the turnaround narrative but also leave little room for execution stumbles. For retirement investors, the dividend appears safe in the near term given management’s prioritization and the genuine momentum from recent quarters, though coverage ratios warrant continued monitoring as the company invests heavily in its store-level transformation.

The coffee giant’s ability to deliver both transaction and ticket growth while expanding margins demonstrates that its operational improvements are resonating with customers. With four consecutive quarters of comparable-store sales gains and an upwardly revised outlook, Starbucks has provided tangible evidence that Niccol’s strategy is taking hold in a challenging retail environment.