Starbucks (NASDAQ:SBUX) reported fiscal first-quarter comparable store sales growth that significantly exceeded market expectations, offering a lift to chief executive Brian Niccol’s efforts to revive performance at the U.S. coffee chain.
Since taking over, Niccol has outlined a turnaround plan centered on streamlining the menu, improving service speed and enhancing the in-store experience, following several quarters of declining sales.
Comparable sales rose 4% in the quarter, comfortably ahead of Wall Street forecasts of 1.97%. The outperformance was driven largely by a rebound in the U.S., the group’s largest market, where demand had previously been pressured by economic uncertainty that prompted consumers to cut back on discretionary spending.
The update also highlighted strong growth across international markets, helping push Starbucks shares up more than 7% following the results.
That said, management cautioned that higher coffee bean prices are beginning to weigh on profitability. Costs have been pushed higher by global supply constraints and geopolitical factors, including U.S. President Donald Trump’s tariffs on Brazil, one of the world’s largest coffee producers. These pressures, combined with expenses linked to Niccol’s strategic overhaul, constrained margins during the quarter.
Adjusted operating margin for the 13-week period ended December 28 came in at 10.1%, slightly below Bloomberg consensus expectations of 10.3%. Adjusted earnings per share were $0.56, compared with forecasts of $0.59.