Starbucks delivered better-than-expected earnings and sales in its second quarter, signalling early momentum in its turnaround strategy as customer traffic continued to recover.
The coffee chain reported adjusted earnings per share of $0.50 for the quarter ended March 29, ahead of analyst expectations of $0.43. Net revenue rose 9% to $9.5 billion, or 8% in constant currency.
Global comparable store sales increased 6.2%, driven by a 3.8% rise in transactions and a 2.3% increase in average ticket.
Performance was strongest in North America, where comps climbed 7.1%, supported by a 4.4% increase in transactions and a 2.6% rise in average spend. U.S. stores posted similar growth, with traffic up 4.3%.
Internationally, growth was more muted. Comparable sales rose 2.6%, with China, Starbucks’ second-largest market, up just 0.5% as higher transaction volumes were partially offset by lower ticket sizes.
CEO Brian Niccol said the results marked a turning point for the company’s “Back to Starbucks” plan, which is focused on improving customer experience and driving consistent execution.
“Our second quarter marked the turn in our turnaround as our Back to Starbucks plan drove both top and bottom line growth,” he said.
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The company raised its full-year outlook for both comparable sales and earnings growth.
Despite top-line gains, profitability remains under pressure. Operating income in North America fell to $679.9 million from $748.3 million a year earlier, with margins contracting to 9.9% from 11.6%.
The decline was driven by increased labour investment, product mix shifts and inflationary pressures, including tariffs and higher coffee costs.
CFO Cathy Smith said the company had prioritised revenue recovery first, with margin improvement expected to follow.
Starbucks opened 11 net new stores during the quarter, bringing its global footprint to 41,129 locations. The U.S. and China remain its core markets, accounting for 61% of total stores.
The results suggest Starbucks’ turnaround is beginning to translate into measurable growth, particularly in its core North American market.
However, margin recovery and international performance, especially in China, remain key watchpoints as the strategy unfolds.
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