SBUX · 10-K · 2026A · Full report

Operating Margin Drivers

STARBUCKS CORP · 2026-11-12 · Importance 46 · Surprise 48 · No source text

Consolidated operating income increased to $3.691 billion from $2.937 billion, and operating margin expanded 180 basis points to 9.7% in fiscal 2026. Sales leverage contributed approximately 210 basis points of margin expansion, partly offset by approximately 130 basis points from labor investments supporting the “Back to Starbucks” strategy. Product and distribution costs rose 90 basis points as a share of revenue, primarily due to mix shifts, while coffeehouse operating expenses declined 60 basis points as a share of total revenue. International margin increased 560 basis points to 17.7%, largely from the China licensed-model conversion and lower China operating and depreciation costs; North America margin rose 50 basis points to 12.0%.

Key facts

• Starbucks’ International operating margin expanded 560 basis points to 17.7% in fiscal 2026, including approximately 330 basis points from the China licensed joint venture conversion and approximately 200 basis points from lower operating and depreciation costs after assets were classified as held for sale. source
• Starbucks reported fiscal 2026 consolidated operating income of $3.7 billion, compared with $2.9 billion in fiscal 2025, and operating margin of 9.7%, compared with 7.9%. source
• Fiscal 2026 diluted EPS increased to $2.21 from $1.63 in fiscal 2025, primarily due to the China divestiture gain and operating margin expansion from sales leverage, partially offset by labor investments and tax impacts. source
• Starbucks’ North America operating margin expanded 50 basis points to 12.0% in fiscal 2026, with approximately 290 basis points of sales leverage partly offset by approximately 180 basis points of labor investments. source
• Starbucks’ Channel Development operating margin contracted 50 basis points to 46.8% in fiscal 2026, primarily because North American Coffee Partnership joint venture income growth lagged segment revenue growth by approximately 170 basis points. source
• Fiscal 2026 operating margin expanded 180 basis points, primarily due to sales leverage of approximately 210 basis points, partially offset by labor investments of approximately 130 basis points. source

Impact estimates