Starbucks Q1 Earnings Beat Expectations Despite Sales Decline

Starbucks Corporation (NASDAQ:SBUX) reported better-than-expected fiscal first-quarter results, with shares climbing over 3% in after-hours trading. The coffee giant posted earnings per share of $0.69 on revenue of $9.4 billion, surpassing analyst estimates of $0.68 EPS on $9.35 billion revenue.

Same-store sales fell 4%, marking the fourth consecutive quarterly decline, but the drop was narrower than the anticipated 5.5%. U.S. same-store sales declined 4%, while China, a key growth market, reported a 6% decline.

The company’s operating margin shrank by 390 basis points year-over-year to 11.9%, impacted by costs associated with its “Back to Starbucks” turnaround plan. These investments included higher wages, improved benefits, extended hours for store partners, and the removal of extra charges for non-dairy milk customizations.

Despite challenges in its core North American and China markets, the narrower-than-expected sales decline and strong revenue performance signal progress in the company’s recovery efforts. Investors responded positively, reflecting optimism about Starbucks’ strategic initiatives to drive long-term growth.

Starbucks continues to adapt its business model, balancing cost pressures with efforts to enhance customer experience and support for its workforce.