Global Growth Returns, But Recovery Still Fragile

Starbucks (NASDAQ: SBUX) delivered a cautiously optimistic set of fourth-quarter results that marked the company’s first global sales increase in nearly two years. Despite lingering weakness in its core U.S. market and uneven recovery in China, the coffee giant’s modest return to growth signaled early progress in its multi-year turnaround plan.

For the quarter ended September 28, Starbucks reported revenue of $9.6 billion, surpassing analysts’ expectations of $9.34 billion. However, earnings per share came in at $0.52, missing the consensus forecast of $0.55, according to Bloomberg data. The muted earnings reflected rising operating costs and restructuring charges associated with the company’s $1 billion efficiency overhaul.

Global same-store sales rose 1%, surprising analysts who had anticipated a 0.5% decline. The gain marked a psychological milestone for investors after seven consecutive quarters of contraction. Shares initially rose more than 3% following the release but pared gains in after-hours trading as markets digested the broader earnings picture.

“We’re on a multiyear turnaround,” said CEO Brian Niccol. “Q4 was a turning point, having delivered the first quarter of global comp growth in seven quarters. Turnarounds are difficult to forecast, but we believe U.S. comps should build through the year, even if recoveries aren’t always linear.”

Domestic Challenges Offset International Progress

While global sales showed signs of stabilization, Starbucks’ U.S. business remained flat, reflecting sluggish traffic and cautious consumer spending. With over 60% of its global store base located in the United States and China, the company’s fortunes remain tied to the spending behavior of consumers in both economies.

In China, same-store sales rose 2%, just below the 2.2% expected, as post-pandemic demand remained uneven across major cities. The company’s focus on urban growth and digital integration has helped sustain momentum, but analysts warn that competition from local coffee chains and shifting consumption habits could limit upside potential.

Meanwhile, Starbucks closed 627 stores during the quarter, 90% of which were in North America. These closures were part of a sweeping restructuring plan aimed at improving profitability and reducing operational complexity. The company also cut 900 non-retail corporate roles and closed open positions, in what CFO Cathy Smith described as a move to “align our store portfolio with our standards for customer experience and profitability.”

Despite these strategic closures, Starbucks continues to invest in digital infrastructure and drive-thru formats to meet evolving customer preferences. The return of its seasonal Pumpkin Spice Latte in late August contributed to modest traffic increases but failed to generate significant year-over-year growth.

A Turnaround Fueled by Discipline and Realignment

Starbucks’ turnaround strategy under Niccol emphasizes operational simplification, cost management, and renewed focus on customer experience. Yet, analysts remain divided on how quickly these initiatives will translate into sustained earnings growth.

“Visitation trends do not appear to have improved in the current quarter,” wrote Stifel analyst Chris O’Cull, who cautioned that the upcoming holiday season will be “crucial for near-term share price performance.”

Niccol, however, expressed optimism about the early signs of recovery in the fiscal first quarter, noting that customers remain “more choiceful with where they choose to spend their dollars.” That comment captures the broader macroeconomic backdrop: as inflation moderates but disposable income tightens, discretionary spending in categories like specialty beverages remains volatile.

Looking forward, Starbucks’ success will hinge on its ability to revitalize U.S. traffic, sustain its recovery in China, and execute its restructuring plan without eroding brand equity. With global comp growth back in positive territory, the company has taken an important first step — but the path to full recovery may prove as complex as the blends it serves.