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Starbucks (SBUX) reported a milestone Q2, delivering growth on both the top and bottom lines for the first time in over two years. Management expressed high confidence in the "Back to Starbucks" turnaround strategy, raising its FY26 guidance for both global comparable store sales (5% or better) and EPS ($2.25 to $2.45) as operational improvements begin to drive durable results.

• Q2 revenue rose 8% y/y to $9.5 bln , while EPS increased 22% to $0.50. Global comparable store sales grew 6.2%, exceeding expectations, with performance led by strong acceleration in the North American segment.
• U.S. comparable store sales grew 7.1%, driven by a 4-percentage point increase in transactions. This transaction strength, the highest in three years, was complemented by a nearly 3% increase in average ticket, fueled by an expanding delivery business (up 30% YTD) and the continued popularity of beverage modifiers like cold foam (up 40%).
• China delivered its fourth consecutive quarter of transaction-led growth, with comps up 50 bps on a 2% increase in transactions. Following the quarter's close, SBUX completed a joint venture transaction with Boyu Capital, which will lead to the deconsolidation of China retail operations and a shift to a licensed model reported within the broader international portfolio.
• Consolidated operating margin expanded 110 bps to 9.4%, though North America margins contracted 170 bps to 10.2%. Margin headwinds in North America included annualizing investments in "Green Apron" service, higher legal accruals, and inflationary pressures - specifically coffee costs, which rose nearly $1 per pound yr/yr.
• Growth initiatives continue to scale, with U.S. 90-day active Rewards membership reaching a record 35.6 mln. To improve mobile ordering predictability, the company is launching a new "scheduled order pickup" feature in May, while store uplifts have now been completed in over 300 locations, with plans to reach 1,000+ by the end of the fiscal year.
• SBUX raised its FY26 global comp guidance to 5% or better and its EPS range to $2.25-$2.45. While revenue is expected to be roughly flat due to the accounting deconsolidation of the China business, the underlying outlook assumes abating coffee and tariff pressures in the back half of the year.
• The guidance upgrade is further supported by a $2 bln cost-savings plan and the transition of the China business to a joint venture structure. This structure is expected to be margin-accretive, even while remaining EPS neutral for the current fiscal year.

Briefing.com Analyst Insight:

SBUX’ Q2 results signal a significant "turn in the turnaround," marked by a long-awaited rebound in U.S. traffic and broad-based international recovery.  The 4% transaction growth in the U.S. is a clear endorsement of the company's "Green Apron" service model and "GROW" scorecard, which have focused on improving staffing, scheduling, and service times. While North American margins face temporary pressure from labor investments and elevated coffee prices, the company’s ability to drive ticket growth through premium modifiers and digital loyalty suggests robust pricing power and brand relevance. The strategic pivot in China to a joint venture model provides long-term visibility and financial flexibility, allowing management to focus on domestic execution while benefit from international licensing economics. Although macroeconomic uncertainty remains a factor, the raised guidance and record-high loyalty engagement indicate that SBUX is successfully transitioning from a phase of stabilization to one of consistent, profitable growth.