What Did Starbucks' Latest Coffee Press Release Reveal?
Starbucks' first-quarter report for fiscal 2026, covering October 1 to December 28, 2025, beat expectations but delivered a split result: global same-store sales rose 4%, with the U.S. up 4% and China up 7%, and North America posting its first positive growth in nearly two years. Net profit, however, plunged 62% year-on-year, and profit margins have shown no improvement for two consecutive years.
Analysts tie the profit slide to the cost of the 'Back to Starbucks' overhaul, including a $1 billion restructuring plan that closed multiple North American stores and cut more than 900 jobs. Starbucks shares fell 7.7% in 2025, a fourth consecutive annual decline, so CEO Brian Niccol's performance bonus fell through and his total pay dropped 67.7%, from $96 million to $31 million. The mixed report has drawn wide attention across the specialty coffee industry.
Starbucks has released its first quarterly report for fiscal year 2026, with same-store sales staging a strong rebound, growing 4% globally, with the U.S. and China markets rising 4% and 7% respectively—the North American market even posting positive growth for the first time in nearly two years. However, the improvement in same-store sales did not translate into better profitability, with net profit plunging 62% year-on-year and profit margins showing no growth for two consecutive years. Meanwhile, Starbucks' stock price fell 7.7% for the full year of 2025, declining for the fourth consecutive year, which caused CEO Brian Niccol's performance bonus to fall through, with his total compensation for fiscal year 2025 shrinking from $96 million to $31 million—a drop of 67.7%. This mixed earnings report reflects the complex situation facing this coffee giant amid its reform and transformation.
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Recently, Starbucks released its first-quarter earnings report for fiscal year 2026, which exceeded market expectations, disclosing the company's operating conditions and key data for the period from October 1 to December 28, 2025, drawing widespread attention.
After more than a year of the "Back to Starbucks" reform, Starbucks' core metric in its earnings reports—same-store sales—has shown a clear recovery, with global same-store sales growing 4%, maintaining growth for two consecutive quarters.
As Starbucks' largest and second-largest markets globally, the U.S. and China recorded same-store sales increases of 4% and 7% respectively in the first quarter of fiscal year 2026. Among them, same-store sales in the North American market marked Starbucks' first positive growth in the U.S. in nearly two years and its best performance in eight quarters. In the eyes of outsiders, this return to positive territory may signal that the "Back to Starbucks" reform vigorously promoted by the CEO has begun to bear fruit.
However, despite the considerable growth in same-store sales, Starbucks' net profit fell sharply by 62% compared to the same period last year, and its profit margin has shown no improvement for two consecutive years.
As for the reasons behind the sharp decline in profitability, analysts believe that on one hand, it stems from the high operating investments generated by Starbucks' continued reform and business transformation, such as a $1 billion restructuring plan launched in mid-last year involving the closure of multiple North American stores and the layoff of over 900 employees. On the other hand, factors such as rising global coffee prices, increasing labor costs, and a significant rise in tax rates have also put considerable pressure on Starbucks' profit margins.
In addition, Starbucks' stock price has not risen despite the improved performance. Data shows that Starbucks' stock price fell 7.7% for the full year of 2025, declining for the fourth consecutive year. It is worth noting that because the CEO's compensation structure directly links performance bonuses to stock price performance, the decline in the company's stock price directly caused the top executive to lose his performance bonus.
Documents filed by Starbucks with regulators show that CEO Brian Niccol's total compensation for fiscal year 2025 was $31 million, a decrease of $65 million (approximately 450 million yuan) from the hefty $96 million annual salary when he first took office in 2024—a drop of 67.7%.
In terms of compensation composition, Niccol's high annual salary in 2024 mainly came from special incentives tied to his onboarding, including over $90 million in stock awards. But in fiscal year 2025, apart from base salary and other regular income, the CEO's compensation structure included only a $5 million bonus and nearly $20 million in stock awards, with no one-time special incentives granted upon joining, and the performance bonus falling through due to the stock price decline, greatly reducing his annual pay compared to before.
After the earnings report was disclosed, voices that had previously questioned Niccol's reform initiatives somewhat diminished, with some analysts and investors taking a positive attitude toward Starbucks' turnaround plan. However, some analysts also pointed out that Starbucks needs to maintain stronger customer traffic in the second half of fiscal year 2026 to improve profitability and justify its large operating investments.
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