It has been a year since Starbucks launched its 'Back to Starbucks' strategy, a bold initiative aimed at transforming the coffee giant's operations, reinforcing its brand story, and restoring its leadership position in the global coffee market. The results suggest a tentative step forward: the company reports its first global comparable sales growth in seven quarters.
A Turning Point After a Rocky Year
Brian Niccol, Starbucks' chairman and CEO, believes the turnaround is beginning to take hold. During an earnings call, he said, 'We've got more work to do, but our return to global comparable growth and the momentum we're building give me confidence we're on the right path to deliver the very best of Starbucks for our customers and shareholders.'
The past year was a challenging period for Starbucks, which experienced its worst sales slump in the post-pandemic era last year. The 'Back to Starbucks' strategy was implemented to address these issues, marking a fundamental shift in the company's approach.
A Milestone Quarter
In the fourth quarter of fiscal year 2025 (ending 28 September 2025), Starbucks reported a 5.6% increase in net revenues, reaching $7.86 billion compared to the same period last year. However, operating income declined sharply by 78.7% to $278.2 million, and operating margin compressed to 9.4%.
Despite this, global comparable store sales rose 1% year-over-year during the quarter. For the full year, however, sales declined by 1% compared to fiscal year 2024. CFO Cathy Smith described this as a milestone: 'We know this continues to be a multi-year turnaround. We remain focused on driving our topline while managing costs within our control to deliver durable, sustainable growth and long-term shareholder value.'
Restructuring and Store Closures
In a bid to optimise its operations, Starbucks announced a restructuring plan on 25 September 2025, involving store closures. Management reviewed store performance to ensure locations maintained adequate foot traffic and operated in the right formats.
By the end of the quarter, the global store count stood at 40,990 — down from previous figures — following 107 net closures during the period. The US and China continue to dominate, accounting for 61% of stores worldwide.
UK Market: Challenges and Opportunities
The UK remains a key market, with 520 company-owned and franchise outlets. However, some stores are facing closures due to declining revenue and unsustainable profitability. The London Evening Standard reported that 10 branches closed in October.
Despite this, Starbucks plans to expand in the UK, with 80 new stores scheduled to open in fiscal 2026. Niccol announced plans to enhance the store experience: 'Over the next 12 months, we also plan to uplift more than 1,000 locations to introduce greater texture, warmth, and layered design.' Meanwhile, the company reduced its workforce by 900 non-retail jobs in September.
Financial Performance and Market Outlook
Starbucks' stock performance has been lacklustre this year. Year-to-date, SBUX is down 7.13% on the Nasdaq and 5.69% on the London Stock Exchange. However, shareholders continue to benefit from a 2.48% dividend yield.
Smith emphasised the company's commitment to shareholder returns alongside growth investments: 'We remain committed to returning cash to our shareholders while balancing our investments in our long-term growth strategy,' she said.
Challenges Facing the Brand
Despite its powerful brand, Starbucks faces financial headwinds. Operating margins remain depressed, limiting growth potential. Rising coffee bean prices are exerting further pressure on profitability.
The company also faces stiff competition and needs to attract customers back to its stores in an increasingly crowded market. Maintaining its leadership position will require innovation, strategic store management, and effective marketing.
Starbucks' 'Back to Starbucks' strategy appears to be making progress, but challenges remain. The recent sales growth offers hope, yet the company must continue to adapt to changing consumer preferences and economic pressures to sustain its recovery.
Disclaimer: Our digital media content is for informational purposes only and does not constitute investment advice. Please conduct your own analysis or seek professional guidance before investing. Remember, investments are subject to market risks, and past performance does not guarantee future results.
Originally published on IBTimes UK
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