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Starbucks (NASDAQ: SBUX) reported fiscal fourth-quarter 2026 results after the close on Thursday, Oct. 29, its first report since CEO Brian Niccol declared the core turnaround complete. Niccol summed it up in the release: “Back to Starbucks started as our turnaround plan. Now, it’s our growth plan.”

Overall, the quarter supported that confidence. U.S. comparable sales climbed 7.7%, well ahead of management’s guidance of 6.5% or better.

Non-GAAP earnings rose 54% to 80 cents per share, topping the 72-cent consensus, and non-GAAP operating margin widened by roughly 450 basis points to 14%.

Even so, shares slipped about 2% in after-hours trading, with revenue coming in below expectations. This isn’t the first time a beat failed to stick. After its fiscal second-quarter report, the stock rallied about 8% that day, then gave it all back over the next month.

Why Revenue Looks Weaker Than the Business

On the surface, revenue fell about 4.5% to $9.1 billion, short of the roughly $9.2 billion analysts were expecting. That decline, however, mostly reflects a change in how the business is structured rather than softer demand. During the third quarter of fiscal 2026, Starbucks shifted its China retail operations into a licensed joint venture, converting nearly 8,000 company-operated coffeehouses into licensed stores. Rather than booking full sales from those locations, Starbucks now earns royalties and product sales. North America revenue, meanwhile, grew 6% to $7.3 billion.

More Visits or Higher Prices?

Now, the source of that comparable sales growth deserves a closer look. Through much of fiscal 2026, more frequent customer returns led the recovery. U.S. transactions rose 4.3% in fiscal Q2 and 4.2% in fiscal Q3, outpacing ticket growth in both quarters.

That balance shifted in fiscal Q4. U.S. average ticket rose 5.2%, while transactions grew a more modest 2.4%. In North America, the company attributed higher ticket to a stronger product mix, more customers adding food to their orders, pricing, and higher delivery sales. So the gain wasn’t simply from raising prices; the quarter clearly leaned more on how much each customer spent than on how many customers walked in.

Margins Held Without the Tariff Boost

Margins were also worth watching. Starbucks recorded tariff refunds in fiscal Q3 that largely offset the tariffs it paid earlier in the year, so the fourth quarter didn’t benefit from that tailwind. Margins expanded anyway. CFO Cathy Smith pointed to sales leverage, cost savings, and lapping last year’s labor investments in the company’s Green Apron service model, partly offset by higher product costs tied to mix. Coffee prices had a roughly neutral effect in the quarter, and management indicated coffee should turn into more of a tailwind in fiscal 2027.

A First Look at Fiscal 2027

Arguably, the outlook carried more weight than the quarter itself. Fiscal 2027 will be a 53-week year, and Starbucks expects North America comparable sales growth of about 4%, with non-GAAP operating margin of 13.5% to 14%. It guided to non-GAAP earnings per share (EPS) of $3.15 to $3.25, a range that includes slightly more than 10 cents from the extra week.

Revenue is expected to decline about 1%, mainly because of the China transition, while the company plans to add roughly 1,200 net new coffeehouses globally, led by International. Starbucks also plans to upgrade more than 2,000 North American coffeehouses and resume share repurchases. It closed about 250 underperforming North American locations in September.

Turnaround Complete?

Niccol has a solid case. Starbucks has now posted five straight quarters of positive comparable sales, more than 80% of its North American company-operated stores delivered positive comps in the quarter, and margins expanded without any help from tariff refunds. Management also said fiscal 2027 is tracking roughly a year ahead of the framework it had laid out for fiscal 2028.

Still, there are reasons to be cautious. Transaction growth cooled noticeably as ticket did more of the lifting, and the roughly 4% North America comp guide for fiscal 2027 is a clear step down from fiscal 2026’s 6.6%. International remains soft, with comparable transactions down 2.8%. Now that the turnaround is declared complete, the yardstick shifts from recovery to sustained growth, which may prove the tougher test.

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