Introduction:Starbucks' recently released financial report for the first quarter of its 2026 fiscal year shows that global same-store sales have stopped declining and begun to rebound, with the U.S. and China markets serving as the main drivers, and the North American market achieving its first positive growth in two years. However, the strong sales performance failed to boost overall profitability, with net profit plunging 62% year-on-year, sparking concerns about the effectiveness of reforms and cost structure. Meanwhile, CEO Brian Niccol missed out on his performance bonus due to years of declining stock prices, with his annual salary shrinking by as much as 67.7%. Get the details all in one read.
Starbucks recently disclosed its financial performance for the first quarter of fiscal year 2026, covering the period from October 1, 2025, to December 28, 2025. This earnings report reveals an unexpected two-sided picture: on one hand, global same-store sales grew by 4% year-on-year, showing growth for two consecutive quarters; on the other hand, net profit plummeted 62% compared to the same period last year, surprising the market.
In terms of major markets, the performances of the U.S. and China markets were particularly impressive. Same-store sales in the U.S. grew by 4%, while those in China reached 7%, indicating that consumer demand in these two key markets is recovering. Notably, same-store sales growth in the North American region marked the first positive growth in nearly two years and the best performance in eight quarters, seen as a sign that CEO Brian Niccol’s “Return to Starbucks” reform is starting to show results.
However,the rebound in same-store sales did not translate into improved profitability. The overall sharp decline in net profit is partly attributed to the ongoing reforms and business restructuring that Starbucks has been undertaking for the past year or more. For example, the company launched a $1 billion restructuring plan in mid-last year, which included closing multiple stores in the North American region and laying off more than 900 employees. While these measures are aimed at long-term efficiency improvements, they have also put pressure on short-term financial results.
In addition, factors such as the continued rise in global coffee bean prices, increasing labor costs, and higher tax rates have further eroded profit margins.
These cost pressures have made it difficult for Starbucks to reverse the trend of declining profits, even as sales recover.
Echoing the financial performance, Starbucks' stock price fell 7.7% for the entire year of 2025, marking the fourth consecutive year of decline. Since a significant portion of the company CEO’s compensation structure is tied to stock performance—especially the performance bonus—this sluggish stock price directly resulted in Brian Niccol losing his performance bonus for the 2025 fiscal year.
According to a filing Starbucks submitted to regulators, Niccol’s total compensation for the 2025 fiscal year was $31 million, a sharp drop of $65 million (approximately NT$450 million) compared to the $96 million he received when he first took office in 2024, representing a 67.7% decrease. Breaking down the compensation structure, in 2024 he received substantial onboarding incentives, including over $90 million in stock awards, but by the 2025 fiscal year, these one-time special bonuses were no longer in place. What remained were base salary, approximately $5 million in bonuses, and nearly $20 million in stock awards.
It’s worth noting that despite the poor financial figures, some market analysts have gradually shifted to a more positive view of Starbucks’ transformation plan, believing that the reforms are showing initial results, particularly in the recovery of sales in key markets. However, observers also caution that if Starbucks wants to truly reverse the decline in profits in the second half of the 2026 fiscal year, it must further improve foot traffic and operational efficiency to justify the large investments—otherwise, the effectiveness of the reforms may still be questioned.
The above content is compiled by CoffeeHunters, a coffee news website.
