Jamie Spencer
Starbucks (SBUX) CEO Brian Niccol is committed to brewing a turnaround, but he’s not yet ready to give a definitive timeline. That hasn’t stopped Wall Street from showing confidence, as shares of the coffee giant rose 5% on Wednesday following better-than-expected earnings.
During Starbucks’ earnings call, the company pointed to improving U.S. sales trends, fueled by efforts to streamline mobile ordering and eliminate dairy upcharges. However, Niccol, who took over as CEO in September 2024, acknowledged that there’s still work to be done.
“I think we’re definitely in the middle of a turnaround,” Niccol told Yahoo Finance.
Sales Decline as Starbucks Reshapes Strategy
Despite a promising trajectory, Starbucks’ latest earnings report showed a 4% drop in global same-store sales, with U.S. and North American sales also down 4%. International sales struggled as well, with China declining 6% year-over-year.
The company’s operating profit margins in both North America and international markets declined by a combined 510 basis points from a year ago, highlighting ongoing challenges.
The research team at Bernstein noted in a client report:
“Still highly controversial [stock] … but at least things don’t seem to be getting worse.”
Niccol’s Vision: A Return to Starbucks’ Roots
As part of the turnaround strategy, Niccol is emphasizing a more welcoming in-store experience. Starbucks recently reintroduced ceramic mugs for dine-in customers, aiming to bring back a sense of hospitality. He’s also working to simplify mobile ordering to ease congestion and improve workflow for baristas.
Despite these efforts, Niccol declined to confirm whether these changes would drive growth in Starbucks U.S. this fiscal year.
“We’re not where we want to be yet. But I’m confident that if we stay committed to these strategies, listen to feedback, and take action, we will return to growth.”
Wall Street Stays Cautious
With uncertainty surrounding Starbucks’ recovery, analysts have begun lowering earnings expectations for the company.
Jon Tower, analyst at Citi, remains skeptical about the stock’s risk-reward profile:
“With coffee prices rising and continued adjustments in mobile ordering and menu offerings, it’s difficult to make a strong long-term case without a clearer view of earnings power in 2026.”
Tower reiterated a Neutral rating on Starbucks stock.
Conclusion
While Starbucks is making strides in revitalizing its brand and operations, the company is still in transition. Investors remain cautiously optimistic, but Wall Street is waiting for concrete signs of a full turnaround before fully backing the coffee giant’s comeback.
