--- title: "SBUX (Trans): FY27 guide hits FY28 margin floor" type: "Topics" locale: "en" url: "https://longbridge.com/en/dolphin/post/44645075.md" description: "Q4 US comps grew 7.7%, and OPM expanded 450bps to ~14%.FY27 margin guidance of 13.5–14% hits the lower end of the FY28 target a year early.However, North America comps guidance was cut to ~4%. In the US, company-operated openings will not exceed 300 until FY28, and expansion will pivot to Intl with ~1,100 net adds in FY27." datetime: "2026-10-29T23:23:13.000Z" locales: - [en](https://longbridge.com/en/dolphin/post/44645075.md) - [zh-CN](https://longbridge.com/zh-CN/dolphin/post/44645075.md) - [zh-HK](https://longbridge.com/zh-HK/dolphin/post/44645075.md) author: "[Dolphin Research](https://longbridge.com/en/dolphin.md)" generator: "portal-rs" --- # SBUX (Trans): FY27 guide hits FY28 margin floor **I. Earnings Highlights Recap** 1\. Shareholder returns and capex: the quarterly dividend was raised to $0.63 per share, marking the 16th consecutive annual increase. SBUX plans approx. $1 bn in share repurchases in FY27. Capex is about 5% of net revenue, primarily for store remodels (uplift) and Back to Starbucks initiatives. 2\. FY27 full-year guidance (53-week fiscal year; the 53rd week included in all metrics except comp) a. Revenue: consolidated net revenue down about 1% YoY, including roughly $700 mn from the 53rd week. The decline reflects lapping China company-operated retail, modest coffee deflation, and fewer new stores in North America. b. North America: company-operated comps of about 4% (52-week comparable). Growth is driven by beverage and food innovation and Green Apron service, with minor contribution from store remodels and sales transfer from closures, while pricing increases remain well below CPI. c. North America revenue cadence: full-year revenue growth will be slightly above comps due to the 53rd week. However, the first three quarters will run below comps, reflecting recent store closures. d. Profit: consolidated OPM of 13.5%–14%, with the midpoint up ~190 bps YoY. EPS of $3.15–$3.25, with the midpoint up nearly 18% YoY, and the 53rd week contributing slightly over $0.10. e. Expenses and segments: the effective tax rate is flat to slightly lower vs. FY26, and consolidated G&A is flat to slightly down. Intl OPM starts around 20% with modest improvement through the year. Channel Development revenue declines ~10%, with long-term margins in the mid-to-high 40% range. f. Stores: about 1,200 net new globally, of which ~1,100 are Intl (roughly half in China). North America adds 90–100, with about half from licensed stores. 3\. Q4 key metrics and drivers a. Total: net revenue of $9.1 bn, down 3.9% YoY, primarily due to China retail shifting to a licensed JV. OPM was about 14%, expanding 450 bps and marking a third straight quarter of margin expansion. EPS was $0.80, up ~54%. b. Full year: net revenue of $37.9 bn (+2.1%), OPM of 11.9% (+200 bps), and EPS of $2.72 (~+27%), above the top end of guidance. c. U.S.: comps 7.7%, with transactions +2.4% and ticket +5.2%. Transaction contribution slowed vs. Q3 as the company began to lap last year's growth, but on a two-year stacked basis, trends improved sequentially. d. North America margin: about 16%, up 440 bps on sales leverage, execution, and cost savings, and after lapping last Aug.'s Green Apron labor investment. Mix-driven product and delivery cost increases partially offset these gains. e. Other: coffee pricing impact was roughly neutral. Consolidated G&A declined about 20% (cost reductions plus China deconsolidation). Interest and other income was $59.2 mn, aided by net gains on certain investments, with an effective tax rate of 24.7%. 4\. Methodology and policy changes a. Starting FY27, annual comp guidance is limited to North America company-operated stores, as the Intl portfolio is predominantly licensed. b. China retail is deconsolidated and reported as licensed revenue, with the 40% JV stake recorded via equity-method income. This will drive most YoY changes in the Intl segment through 1H FY27. c. The $2 bn gross cost-out plan is about half realized, with savings to continue through FY28. **II. Earnings Call Details** **2.1 Key management commentary** 1\. North America store execution a. Q4 North America company-operated comps were +7.9%, with Canada growing double digits. Over 80% of North America company-operated stores posted positive comps, vs. under 50% a year ago. b. Avg. service times remain within targets, with ongoing SmartQ and workflow optimization. Daily delivery now covers nearly 90% of North America company-operated stores, and inventory availability is at a record high. c. A new quarterly store incentive program governs labor scheduling and product waste. Over 3,000 Coffee House coaches, all internally selected, are in the U.S. company-operated system, and the program will expand to more North America stores in FY27. d. Hourly worker attrition is well below the industry average. Third-party studies consider pay and benefits to be industry-leading. 2\. Brand, menu, and membership a. Brand favorability is near a record high, with ongoing strength in espresso, Refreshers, matcha, and bakery. b. The Aug. Unicorn event spanned 34 markets, the first global store-coordinated activation, and set a North America company-operated weekend sales record. It was followed by the strongest fall launch day in North America and a global Peanuts collaboration that drove multiple local sales peaks. c. U.S. company-operated comps were supported by both ticket and transactions. Ninety-day active members reached a record 36 mn, up YoY and QoQ, with growth across income tiers, generations, and dayparts. d. Merch still represents a small mix, but two Q4 merch drops lifted ticket. In FY27, beverage, food, and merch will be integrated in series-based launches to drive attach, with platform focus on functional and zero-sugar beverages, new bakery, and portable high-protein options. e. U.S. delivery revenue has more than tripled over the past five years. Most of it is incremental transactions. 3\. Store assets a. Over 1,700 North America remodels were completed by fiscal year-end, exceeding the target. Remodeled stores saw transaction gains across channels, dayparts, formats, and member tiers, and more than 2,000 remodels are planned for FY27. b. North America has closed stores that did not meet experience and financial standards. Smaller formats have opened in multiple markets, moving from prototype to live within a year. c. North America still has long-term whitespace for about 5,000 additional stores. Rebuilding the development pipeline takes time, so company-operated openings will slow in FY27, with a healthier pipeline thereafter. 4\. FY27 operations and digital a. The goal is to extend the morning rush and build an afternoon peak. The company is improving bar flow, piloting the Mastrena 3 machine, and exploring next-gen drive-thru. b. FY27 is a major technology modernization year. New scheduling and POS systems will launch, while supply chain pilots focus on demand forecasting, order accuracy, and replenishment cycles. c. From Q2, delivery integrates directly into the App, with delivery orders accruing and redeeming Stars. The company is exploring AI search, conversational and agent-led ordering, plus in-vehicle ordering and ordering via emerging AI platforms. d. About half of customers use drive-thru. In FY27, the company will pilot a back-end AI model to assist partner order entry and explore in-store recognition, personalized digital menus, and streamlined payments, all in early testing. 5\. International a. In Q4, most licensed and company-operated markets delivered positive comps, led by the U.K., the Philippines, and Mexico. Intl company-operated comps (primarily Japan and the U.K.) were +0.9%, with strength in the U.K. and higher bases in Japan. b. China exceeded FY26 goals. Asia Pacific surpassed 6,000 stores, Latin America and the Caribbean exceeded 1,900, and the company entered nearly 500 new communities. c. Intl net new store openings will accelerate nearly 50% vs. FY26 to about three per day in FY27. Intl stores are expected to grow from over 23,000 today toward nearly 40,000 long term, with China and India likely to double. **2.2 Q&A** **Q: Does the 4% North America comp guide equal the '3%+ long-term algorithm' plus extra from closures and remodel transfers? How are trends quarter-to-date?** A: **The 4% guide rests on business fundamentals, and the company did not comment on quarter-to-date trends.** It is supported by Green Apron service, membership and digital initiatives, and menu and marketing innovation. Relative to the FY28 framework, SBUX is roughly a year ahead, and the underlying strength supports a 4% commitment. **Q: What is the quarterly cadence for FY27 margins?** A: **Cadence is more balanced than FY26, with about 40%–45% in the first half.** Last year’s P&L had more moving parts, while this year distribution is smoother. The rest falls in the second half, and the comment did not specify whether this refers to profit or margin expansion. The Investor Day FY28 OPM target is 13.5%–15%, and FY27 is already guided to the low end. Management attributes this to cost reductions and fundamentals that drive revenue and transactions. **Q: What incremental benefits remain after the $2 bn cost-out plan?** A: **Roughly half of gross savings have been realized, with focus shifting to COGS and operating expenses.** This year centered on G&A. COGS savings will materialize as new suppliers scale and existing contracts roll off, mainly in FY27–FY28, followed by opex; G&A has the least remaining runway, mostly the annualization of actions taken this year. The pipeline of initiatives continues to grow. **Q: How will U.S. net new openings ramp from here?** A: **About 100 net new U.S. stores, or slightly fewer, in FY27, with a goal of 300+ in FY28.** The slowdown reflects rebuilding the development pipeline and closures. Prototype formats shown at Investor Day are operating in several markets with solid build costs and early operating feedback, and while it is early, openings are performing well; management believes the hardest part of rebuilding the pipeline is done, paving the way toward 5,000+ incremental North America stores. **Q: What is the timeline and impact for drive-thru tech pilots?** A: **It is early days, with no timeline or quantified impact provided.** The aim is to improve both customer and partner experiences and increase beverage throughput, thereby lifting revenue and profit. Management said it is too early to provide specifics. **Q: North America margin flow-through beat in Q4; what beyond sales drove this?** A: **The biggest driver was sales leverage, followed by lapping last year's Green Apron labor investment.** Around 7% comps in the U.S. provided significant leverage, with the mid-Aug. service investment now lapped. There were also modest benefits from pricing and supply chain savings. **Q: What are the FY27 margin assumptions for North America and Intl, and are there one-offs causing quarterly unevenness?** A: **No North America segment OPM was given, and no one-offs are expected, with coffee costs turning into a YoY tailwind.** Coffee prices were elevated last year and eased through the year, with no Q4 impact, and should be a modest tailwind in FY27. Cost reductions continue to contribute, and the largest driver remains leverage from the comp guide. **Q: How did Q4 comps break down, and how will FY27 mix between transactions and ticket?** A: **Q4 sales transfer from closures contributed about 200 bps, and FY27 growth is more ticket-weighted.** The transfer contribution was similar to last quarter. Of the 5.2% ticket growth, roughly half came from pricing and delivery, and half from attach and mix; in FY27, ticket will weigh more than transactions, with pricing below CPI and the rest from transactions. Management said sustained transaction strength underpins confidence to guide FY27 above the long-term '3% or more'. **Q: Has North America store whitespace narrowed to 5,000 from prior views?** A: **The company has clear visibility into 5,000 incremental stores and sees potential upside over time.** This is based on completed market planning, with 5,000 used as the current working figure. **Q: With Q1 the easiest compare, why guide relatively even comps across the year in North America?** A: **On absolute transactions, quarters are already fairly even, and the company is intentionally smoothing seasonality.** Last year’s absolute transactions were broadly consistent across quarters. Product cadence is less seasonally defined than in the past, and FY27 seasonality should weaken further, though some quarterly variability will remain. **Q: In the proxy, what constitutes 'successful launch of a new U.S. platform'?** A: **Examples include protein and energy Refreshers and extending Bites into the afternoon daypart.** The food platform will expand Bites beyond breakfast into the afternoon. Health and functional platforms will go beyond protein, with limited-time offers and platform products advancing in parallel to drive transactions and sales. **Q: What do seven-day delivery and 24-hour replenishment mean for beverages, food, and grab-and-go?** A: **Daily delivery is almost fully rolled out, with 24-hour replenishment expected within 6–12 months.** The goal is to deliver the right products to the right stores at the right time. Store needs vary widely across grab-and-go, hot food, and handcrafted beverages, and replenishing within 24 hours based on signals should ensure availability, leaving significant upside. **Q: Which areas are running ahead of the FY28 framework, and does that imply upward revisions?** A: **Sales, margins, and profitability are ahead, with no explicit upward revision, and FY28 is not the finish line.** Management emphasized that growth is anchored in operating fundamentals, augmented by digital, menu, and store asset innovation. **Q: Do scorecards still correlate with single-store comps, and what explains negative-comp stores?** A: **Scorecards remain effective indicators, and negative-comp stores often have idiosyncratic factors.** Examples include road construction or reallocation of delivery volumes across stores. A small subset needs operational improvements tied to team stability or area management; one store moved from around rank 1,574 to the top 3 systemwide based on scorecard-driven focus. **Q: With capex at about 5% of revenue, will acceleration in openings require an increase?** A: **Capex is still expected at about 5% of revenue (plus/minus) next year, with a small share for new capabilities.** Capex mix was lower in FY26 due to fewer openings. FY27 increases will go mainly to expanded remodels and new store support, while supply chain does not require large incremental capital; stores remain the biggest use. **Q: What is the actual uplift from remodels, and is it more transactions or ticket?** A: **No quantified uplift or mix provided, with remodels serving both brand-building and transaction growth.** Customers and partners report that stores 'feel like Starbucks again.' The uplift shows in overall results, with 2,000+ remodels planned in FY27. **Q: Will Japan transition to a licensed model?** A: **No timeline provided, with ongoing evaluation of ownership structures and disclosure if changes occur.** Intl has delivered seven straight quarters of positive comps, and revenue excluding China rose 5%. Japan had another strong year. **Q: Post membership revamp, how are frequency and spend trending?** A: **Upgrades are primarily frequency-driven, with ticket increases to come from personalization.** Under the new Green, Gold, and Reserve tiers, members continue to move up. New members start with lower frequency, which improves over time, and the 60-Star $2 redemption is well received; next, personalization is the focus. **Q: How has the afternoon daypart progressed vs. a year ago, and how are energy Refreshers performing?** A: **Afternoon attach has improved the most; energy Refreshers skew morning, while caffeine-free variants lift afternoon.** With upgraded food and pastry cases, afternoon attach improved the most; FY27 will emphasize caffeine-free Refreshers and launch a tea platform with health functionality. Daily transactions per store are up YoY across dayparts. Matcha is now a platform exceeding $1 bn in sales and growing rapidly YoY. Most orders add cold foam, with stronger afternoon demand, and customers shifting to cold beverages tend to favor larger sizes and cold foam add-ons. **Q: With Green Apron labor now in the base, can staffing be fine-tuned for more leverage?** A: **Management’s 'fine-tuning' focuses on extending peaks, with the morning peak targeted to lengthen from three to four hours.** With labor aligned to demand, morning performance has strengthened, and labor is 'earned' with transaction growth. The afternoon peak should extend from one to two hours, ideally to three; historically, Starbucks had a four-hour morning peak. Future tweaks will focus on more growth, faster throughput, and bigger peaks. \ **Risk disclosure and statement:**[**Dolphin Research disclaimer and general disclosure**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [SBUX.US](https://longbridge.com/en/quote/SBUX.US.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**