Brian Niccol speaks on turnaround
Starbucks is back — at least that’s what executives said at the company’s investor presentation in New York City on Thursday.
“Starbucks is back today,” said Chief Brand Officer Tressie Lieberman. “One in three consumers say Starbucks is their first choice for coffee or tea away from home.”
His announcement comes more than a year after CEO Brian Niccol joined the company and launched a turnaround strategy called, of course, “Return to Starbucks.” The plan was largely aimed at improving the coffee chain’s in-store experience after years of prioritizing mobile orders and profits to the detriment of customers and employees. The strategy included small touches like reintroducing the condiment bar and requiring baristas to use Sharpies to write personal messages, as well as larger investments like hiring more baristas and renovating their cafes for $100,000 per head.
“Obviously, both in the United States and around the world, Starbucks is starting to shine again,” Niccol said Thursday.
The company’s latest financial results appear to show that customers are coming back and the recovery is continuing. As a result, Starbucks plans to look forward this year instead of looking back.
“We will look to play offense and innovate in fiscal 2026,” Niccol said. “We are not yet finished with our ‘Return to Starbucks’ plan or our broader transformation, but I am confident in our strategy, our progress, our pace of change, and the opportunity before us.”
The coffee chain is forecasting globally through fiscal 2028, predicting that U.S. same-store sales will rise at least 3 percent, revenue will rise at least 5 percent and earnings per share will rise between $3.35 and $4. It also plans to add more than 2,000 cafes worldwide in fiscal 2028, including 400 new company-owned U.S. locations.
“This is just an interim point in our return. Our goals extend far beyond this timeline,” Niccol said.
In the coming months, Starbucks plans to re-add tiers to its loyalty program, introduce Energy Refreshers and more efficient espresso machines to meet these new financial goals.
Starbucks investors didn’t seem as confident as executives on Thursday: The company’s shares were down more than 1% in morning trading. The stock has fallen nearly 12% in the past year, reducing Starbucks’ market value to about $109 billion. Along with doubts about the company’s turnaround, investors’ concerns about a broader pullback in consumer spending and higher coffee prices have also weighed on its valuation.
‘Just the beginning’
The investor day comes a day after the company released its fiscal first-quarter earnings report.
For the first time in two years, the coffee chain’s traffic increased and same-store sales grew by 4%. A year ago, the company’s same-store sales fell 4%, while transactions were down 6%.
CEO Brian Niccol told CNBC that the company is making progress on some of its goals, such as making each drink in under four minutes. “Squawk Box” Thursday morning.
“This is really just the beginning,” Niccol said of the company’s turnaround.
But while Starbucks’ turnaround strategy has paid dividends, investments in its restaurants and workforce weighed on profits in the first quarter of the fiscal year. The company’s quarterly earnings per share missed Wall Street forecasts.
Executives on Wednesday also shared the company’s first annual forecast since Niccol suspended its outlook shortly after taking over at Starbucks. Starbucks predicts fiscal 2026 adjusted earnings per share will be in the range of $2.15 to $2.40, with global and U.S. same-store sales rising at least 3%.
Niccol told CNBC’s Andrew Ross Sorkin that menu changes like protein cold foam have helped Starbucks attract loyal and occasional customers alike. He added that the company will introduce more menu innovations, rewards program changes and an enhanced digital experience going forward.
Much of this innovation will, of course, focus on Starbucks’ beverages. During the investor presentation, Lieberman said the coffee chain plans to launch a premium, sugar-free version of its chai this spring.
Starbucks will also introduce Energy Refreshers, the latest expansion to its $2 billion beverage line. The new additions will contain more caffeine than the original Refreshers, which provide drinkers with about the same boost as caffeinated soda.
Starbucks’ China pivot
Executives also shared more details about the company’s international operations, which will undergo a major transformation when Starbucks forms a new company. Joint venture with Boyu Capital to operate operations in China, the company’s second largest market.
Pending regulatory approval upon completion of the deal in the second quarter of fiscal 2026, Boyu will hold up to a 60% stake in the joint venture.
Although the deal will result in lower international revenue, the division’s asset-lightening model is expected to boost Starbucks’ profits in the long run. In the last ten years, McDonald’s And Coca Cola They pursued similar strategies by re-granting the rights to their international restaurants and bottlers, respectively, to reduce operating costs and increase earnings.
In fiscal 2025, Starbucks’ international margin was 13%; According to Starbucks International CEO Brady Brewer, the company expects margins to be high, assuming the joint venture is formed.
Both fiscal 2026 and fiscal 2028 forecasts assume the company will continue to operate Starbucks retail stores in China. While the company expects profit margins to increase as part of the plan, overall earnings may not increase as quickly.
Under the joint venture model, the company’s earnings per share would fall about 15 cents in fiscal 2028, CFO Cathy Smith said.
“I want to say that this is within our current plans for the Chinese market,” Smith said. “We fully expect that we’ll see higher growth in China with our new partner… and so I think we’ll be able to offset some of that in the future.”
