Starbucks FY2026 Earnings: Profit Up 36% as China Licensing Shrinks the Balance Sheet 11%

Starbucks closed fiscal 2026 a smaller company that earns more. Revenue rose 2% to $37.9 billion and operating income 26% to $3.7 billion, but the bigger change is on the balance sheet: total assets fell 11% after Starbucks turned its China stores into a licensed joint venture with Boyu Capital. Goodwill dropped by $2.1 billion, store property and leased sites by about $3 billion, and in their place sits a $1.8 billion equity stake. Selling the stores also added a $536 million gain to net income, which rose 36% to $2.5 billion. In the fourth quarter the effect is plain: revenue fell 4% while global comparable sales rose 7.2%.

Owning stores versus licensing them​

When Starbucks runs a store itself, every latte sold is Starbucks revenue, and the rent, staff and equipment are Starbucks costs and assets. When a licensee runs it, Starbucks books only what the licensee pays it, product sales and royalties, and the store's assets sit on someone else's balance sheet. The earnings release describes exactly that switch for China in the third quarter: it "drove lower company-operated coffeehouse revenues and largely contributed to higher product sales to, and royalty revenue from, our licensees."

The fourth quarter shows both sides. International segment revenue fell 37% to $1.3 billion, while its operating margin rose to 19.7%. Consolidated revenue fell 4.5% to $9,141.2 million even as North America, untouched by the deal, grew revenue 6% to $7,328.4 million on 7.9% comparable-store growth. Licensed coffeehouse revenue for the full year rose 6.1% to $4,615.8 million while company-operated revenue barely moved, up 0.6%.

The same trade-off applies to a small franchisor deciding whether to open its own locations or license them: owned units bring all the revenue and all the risk; licensed units bring a smaller, steadier fee and leave the capital to the partner.

The balance sheet shrank by $3.6 billion​

Goodwill was between $3,218 million and $3,677 million at every fiscal year-end from 2021 through 2025, and $1,249.2 million on September 27, 2026. The drop coincides with the China divestiture: goodwill attached to the stores left the balance sheet with them. Property, plant and equipment fell to $6,944.1 million from $8,493.5 million and operating lease right-of-use assets to $7,858.9 million from $9,315.7 million. Equity investments rose to $1,784.1 million from $466.2 million, which is how Starbucks now holds its retained interest. Total assets fell to $28,389.9 million from $32,019.7 million.

Starbucks also cut long-term debt to $11,777.9 million from $14,575.9 million. Its total equity is still a deficit, $7,661.8 million, because past buybacks and dividends exceeded retained profit; the period file carries every caption.

Earnings rose faster than revenue, with help from the sale​

The treemap shows the fiscal year's costs: $17,189.8 million of coffeehouse operating expenses, $12,235.2 million of product and distribution costs, then G&A, depreciation and restructuring. The ledger posts coffeehouse operating expenses and the other operating lines on Expenses:OtherNet, one labelled posting per filing caption, as in its earlier years, so the categories stay comparable across periods; the $536.3 million divestiture gain and $294.8 million of income from equity investees appear there as negative postings.

Operating income rose 25.7% to $3,691.1 million and operating margin to 9.7% from 7.9%. General and administrative expense fell 9.3% and restructuring and impairment charges fell to $688.6 million from $892.0 million. Below the operating line, the divestiture gain lifted pre-tax earnings: excluding it, earnings before income taxes were $3,304.8 million against $2,507.3 million, up 32% by our computation, rather than the reported 53%. Net income attributable to Starbucks was $2,526.7 million and diluted EPS $2.21, against $1.63.

Each row is one fiscal year: revenue as a negative credit and Equity:Adjustments as net income including noncontrolling interests. Net income peaked at $4,199.3 million in fiscal 2021 and fell to $1,856.4 million in fiscal 2025; fiscal 2026 at $2,526.1 million is a partial recovery, and the $536.3 million pre-tax gain from the sale is about a fifth of it.

What to watch in fiscal 2027​

• A smaller revenue line, by design. Starbucks guides fiscal 2027 revenue down about 1%, including roughly $700 million from a 53rd week, "primarily due to the transition of Starbucks China's retail operations to a licensed joint venture model."
• Comparable sales. North America comparable sales are guided to grow about 4%, after 6.6% in fiscal 2026 and 7.9% in the fourth quarter, when ticket growth (5.0%) did more of the work than transactions (2.7%).
• Margins. The non-GAAP operating margin guide is 13.5% to 14.0%. GAAP margin was 9.7% this year; the difference is mainly restructuring, transaction and transformation costs, so the GAAP figure will close the gap only if those costs fall.
• Capital returns. CFO Cathy Smith said Starbucks plans to resume share repurchases in fiscal 2027. With a $7.7 billion equity deficit, buybacks deepen it again unless earnings outpace them.