Starbucks reported its first quarter of consolidated operating margin expansion since early fiscal 2024, with the metric rising 110 basis points year over year to 9.4% in the fiscal second quarter. However, North America segment operating margin contracted roughly 170 basis points to 10.2%, weighed down by about 190 basis points of product and distribution cost increases tied to innovation-led product mix, tariffs, and elevated coffee prices, as well as greater-than-anticipated legal accruals. The company expects coffee and tariff pressures to begin easing in the back half of fiscal 2026, supported by recent trends in coffee prices, though the benefit may lag due to purchasing and hedging practices. Stronger U.S. traffic and cost-savings initiatives are also expected to provide sales leverage, potentially offsetting North America margin headwinds. Shares of Starbucks have gained 8.5% over the past year, outperforming the industry's 8.2% decline, and the stock trades at a forward price-to-sales multiple of 2.93, below the industry average of 3.32.
Starbucks CorporationCoffee and tariff pressures expected to ease in back half of fiscal 2026, reducing cost headwinds.
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