Key Highlights

  • On Sep 10, 2026, Niccol said "Starbucks is back" and named cafe renovations as the next priority, with 1,500 or more expected by the end of fiscal 2026.
  • Fiscal Q3 global comparable sales rose 7.9%, non-GAAP EPS rose 70% to $0.85, and fiscal 2026 non-GAAP EPS guidance was raised to $2.55 to $2.65.
  • The shares closed at $95.11 on Sep 22, up about 13% year to date but down about 11% over the past month; Q4 results are expected around Oct 28.
  • Shares trade at about 55 times trailing earnings, with a mean one-year analyst target near $112 and a forward Dividend Yield of roughly 2.6%.

After Brian Niccol declared that "Starbucks is back," the next phase for Starbucks (NASDAQ:SBUX) is about scale: renovating thousands more cafes, turning a sales recovery into sustained profit growth and expanding the store base again, including in China through a new joint venture. The coffee chain's chairman and CEO made the declaration on September 10, 2026, and in a letter to employees said the company has "returned to growth, delivered positive global comps and improved margins."

The question for investors is whether the recovery can carry into fiscal 2027. The latest results give Niccol evidence to point to. In its fiscal third quarter, reported July 29, global comparable store sales rose 7.9%, and Starbucks raised its full-year guidance, including non-GAAP Earnings per share of $2.55 to $2.65.

The stock has not moved in a straight line since. Starbucks shares closed at $95.11 on September 22, up about 13% year to date but down about 11% over the past month. The shares were little changed on the day of Niccol's remarks, and the stock has still gained about 30% since his hiring was announced in 2024.

From Turnaround to Renovation

Niccol launched the "Back to Starbucks" plan on his second day as CEO in September 2024, focusing on service quality, simpler operations and restoring the coffeehouse atmosphere. With that phase declared complete, the focus is shifting to physical upgrades.

More than 1,000 locations have been renovated over the past nine months, and the company expects to reach 1,500 or more by the end of fiscal 2026, with thousands more planned in the next fiscal year. The renovations typically center on seating and lighting to create a warmer environment. "I want to finish the Job on uplifting all of our coffeehouses," Niccol said.

The CEO also outlined six forward-looking ambitions, including becoming "the world's greatest Customer Service company" and growing the global store count. Starbucks is using digital menu boards to promote different items at different times of day, alongside newer products such as protein drinks, Energy Refreshers and seasonal favorites like pumpkin spice drinks.

Third-Quarter Results Showed Broad Momentum

For the 13 weeks ended June 28, 2026, Starbucks reported its fourth consecutive quarter of comparable sales growth and second straight quarter of Margin expansion, according to its July 29 release. Global comps rose 7.9%, driven by a 4.2% increase in transactions and a 3.5% rise in average ticket. North America comps grew 8.1%, U.S. comps 7.9% and international comps 5.7%.

Consolidated net revenues fell 1% to $9.3 billion, reflecting the transaction that moved Starbucks' China retail operations into a joint venture. GAAP Operating Margin widened 60 basis points to 10.5%, while non-GAAP operating margin expanded 430 basis points to 14.4%. GAAP EPS rose 86% to $0.91 and non-GAAP EPS rose 70% to $0.85. The company said lower Inflation and Tariff refunds helped margins, partly offset by restructuring costs and labor investments.

"We have more work to do," Niccol said in the release, "but we're relentlessly focused on reclaiming the third place." Starbucks also used part of the China sale proceeds to repurchase about $1.3 billion of its notes through tender offers and paid a quarterly dividend of $0.62 per share on August 28.

Guidance for the Rest of Fiscal 2026

Starbucks expects fourth-quarter U.S. comparable sales growth of 6.5% or more, leading to full-year U.S. comps slightly above 6.0% and global comps nearing 6.0%. It guided for consolidated Revenue to be flat to slightly higher, non-GAAP operating margin above 11.0%, non-GAAP EPS of $2.55 to $2.65 and roughly 600 to 650 net new coffeehouses globally. At quarter-end the company operated 41,304 stores, 33% company-operated and 67% licensed, after opening 175 net new stores in the quarter. U.S. stores numbered 16,933, or 41% of the global portfolio. Chief Financial Officer Cathy Smith said the results reflect "the growing durability of our performance across both the top and bottom line."

China and the Competitive Landscape

In China, Starbucks transferred a majority stake in its Business to Boyu Capital. Niccol said both partners share an ambition to expand from about 8,000 stores to as many as 20,000 over time. The structure reduces Starbucks' direct exposure to a fiercely competitive market, where local chains such as Luckin Coffee have grown rapidly with low prices and dense store networks.

In the United States, Starbucks competes with fast-growing drive-thru chains such as Dutch Bros (NYSE:BROS), quick-service restaurants including McDonald's (NYSE:MCD) and Dunkin', and independent cafes. Its recent transaction growth suggests the service and menu changes are winning back visits, but rivals are also investing in beverages, which are among the highest-margin categories in restaurants.

Risks to the Next Phase

  • Execution and cost: Renovating thousands of stores requires significant Capital and could disrupt operations while work is under way.
  • Margins: Labor investments, restructuring costs and Commodity prices, including coffee, could limit margin gains even as sales improve.
  • Consumer demand: A slowdown in discretionary spending could hurt traffic and ticket growth.
  • Valuation: The shares trade at about 55 times trailing GAAP earnings, leaving less room for disappointment.

On the positive side, the company has already delivered four straight quarters of comparable sales growth, and its asset-light China structure may support international expansion. The mean one-year analyst target is about $112, with a forward dividend yield of roughly 2.6%.

The Fiscal Fourth-Quarter Checkpoint

The next major catalyst is Starbucks' fiscal fourth-quarter and full-year report, expected around October 28, 2026. Investors will look at whether U.S. comps reach at least 6.5%, whether non-GAAP EPS lands within the $2.55 to $2.65 range, and what fiscal 2027 targets management sets for renovations, store openings and margins. Updates on the pace of the Boyu joint venture's expansion in China and on holiday-season menu launches are also likely to shape sentiment.