Starbucks posted its first sales increase in two years. Why did the stock fall?

The Starbucks coffee chain recorded sales growth for the first time in almost two years. However, financial results remain mixed: profits were below forecasts. The company's management promises that the last quarter will be a "turning point", but warns that the business recovery may not follow a "straight line".

Starbucks' quarterly comparable sales turned to growth for the first time in nearly two years. The company said its worldwide comparable sales for the fourth quarter ended Sept. 28 rose 1%. Overseas markets contributed to the growth, with international unit sales up 3%, while results in the U.S. market were flat.

The result was much better than forecasts: Wall Street analysts expected a 0.3% decline in global sales and a 0.9% drop in the U.S., CNBC reported. The company's revenue increased by 5% year-on-year and reached $9.6 billion, exceeding the forecast ($9.35 billion).

Despite the growth of sales, Starbucks shares after the release of the report declined by almost 3% on the premarket. Pressure on the quotes was exerted by mixed earnings results, which were below expectations. Adjusted earnings per share amounted to $0.52, while analysts predicted $0.56. The company's net income fell to $133 million, or $0.1 per share, compared to $909 million, or $0.8 per share a year earlier.

After seven consecutive weak quarters, Starbucks is trying to reverse a trend of falling sales amid increasing competition and cautious consumer behavior that has been discouraged by high prices and congested service points, MarketWatch writes. Among the measures the company has taken are improving the customer experience and reducing service times to less than four minutes per order. The company has also revised its marketing strategy: instead of short-term promotions, the focus is now on coffee quality and innovation, including cold-foam and protein-rich drinks, the channel notes.

The quarterly report released on October 29 showed that the company's "reboot" strategy is starting to show results, CNBC writes. According to CEO Brian Nichol, U.S. coffee shops have seen an increase in sales since September. Management called the past quarter a "pivotal moment" in its brand revitalization efforts. However, the company has not yet provided a detailed outlook for the next fiscal year. CFO Cathie Smith clarified that detailed 2026 guidance and long-term goals will be revealed at an investor day in late January 2026. At the same time, she urged analysts not to rush into optimism.

"Turnarounds are difficult to predict. And while we have every reason to believe that comparable sales at our own U.S. locations will grow for the year, we also recognize that recovery doesn't always follow a straight trajectory," CNBC quoted Smith as saying.

This article was AI-translated and verified by a human editor