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Starbucks (SBUX) is moving higher today after showing clear progress in the first year of its "Back-to-Starbucks" plan in its Q4 (Sep) report. The company missed EPS expectations, as profitability is still being weighed down by restructuring costs, inflation (coffee/tariffs), and heavier labor investments. However, revenue beat estimates, increasing 5.5% yr/yr to $9.57 bln, its fastest growth in seven quarters.

• Notably, global comp sales grew +1%, its first positive comp in nearly two years, and a nice improvement from the -2% comp in Q3.
• North America comps were flat, with the US flat but improving sequentially, and Canada positive; US comp sales turned positive in September on transactions and have stayed positive through October.
• International delivered a comp of +3%, led by Japan (back to positive), China, the UK, and Mexico; China comps of +2% marked a second straight quarter of growth, and Starbucks continues to seek a local partner to support longer-term growth.
• Results reflect progress in the plan and the Green Apron Service rollout, which is driving better staffing, faster service times, and stronger value perception.
• EPS weakness was mainly tied to these investments, portfolio actions, tariffs, and higher coffee prices; operating margin fell 500 bps yr/yr to 9.6%.
• Looking ahead, Starbucks will provide more formal guidance at its January Investor Day, though management sounded encouraged about the upcoming holiday season and current comp trends.

Briefing.com Analyst Insight

This quarter showed notable progress under Starbucks' "Back-to-Starbucks" plan. Comps finally turned positive for the first time in nearly two years, and results improved sequentially across key markets, especially in the US. Current trends also show continued momentum, with comps turning positive in September and remaining there into October. Profitability is still hurt by these turnaround investments, but it's good to see them producing visible results. Management noted that turnarounds can be difficult to forecast, yet remains encouraged by the progress, and investors are, too.