MGM Resorts Q1 2026 Financial Highlights and Market Outlook

Key factors influencing Starbucks’ Q2 2026 guidance change

Starbucks’ updated outlook for fiscal 2026—specifically the raised guidance for global comps to 5% growth or better and EPS to $2.25–$2.45—was driven by a mix of (1) improved trading performance seen in Q2, (2) expected margin support from cost actions and sales leverage, and (3) explicit macro/China structure assumptions that temper revenue and cost expectations.

1) Turnaround momentum and stronger top-line execution (supports the guidance increase)

Management attributed the guidance lift to Q2 demonstrating that their turnaround plan is working and that progress is becoming repeatable:

• Starbucks reported Q2 consolidated revenue of $9.5B (+9% YoY) and global comps up 6% with operating margin improving to 9.4% (+110 bps), which management framed as evidence the turnaround is progressing. ¹²
• Management also stated that positive comp trends continued through April and that this gave them confidence to raise fiscal 2026 global comp guidance to 5% growth or better. ¹²
• Q2 performance was described as showing improved execution across North America and International (e.g., U.S. company-operated transactions up; U.S. comp growth accelerating to 7.1%), reinforcing the “top-line first” approach underlying the guidance raise. ³⁴

2) Cost savings plan and expected margin build as sales leverage offsets investments/headwinds

Starbucks guided for slightly positive year-over-year consolidated operating margin growth, with several operating drivers:

• Management expected sales leverage to build over the next 2 quarters as they “execute with discipline” and advance cost savings. ⁵
• They expected coffee and tariff pressures to ease in the back half of fiscal 2026, which would support margin improvement. ⁵
• They expected the China JV structure to be margin accretive, with “roughly half” of China JV revenues flowing to operating income. ⁵
• They reiterated remaining on track with a $2B cost savings plan (gross savings expected to be realized through fiscal 2028, balanced across product/distribution costs, OpEx, and G&A). ⁵

Net effect: the company’s margin expectations rely on cost savings and sales leverage, partially offsetting investments in “Back to Starbucks” and other headwinds. ⁵

3) Macro uncertainty is explicitly built into guidance (supports cautious EPS but still enables the raise)

Even with the guidance increase, Starbucks explicitly incorporated heightened macro uncertainty into comps and profitability expectations:

• Management said the macro environment brings heightened uncertainty around operating conditions and consumer behavior, and that their comp guidance accounts for these considerations. ⁵
• In the EPS guidance discussion, management emphasized prudence because they still have half a year in front of them and because top-line strength doesn’t automatically imply full EPS flow-through. ⁶

In other words, the guidance change reflects confidence from Q2 trading, but with explicit caution for the remainder of fiscal 2026. ⁶

4) Tariffs and coffee price pressure are expected to abate in the back half (key for EPS range)

Coffee and tariff dynamics were a central part of how Starbucks explained the guidance and the expected timing of cost relief:

• Management said tariff and coffee pressures are expected to moderate in the back half of fiscal 2026, citing recent coffee-price trends. ⁷
• In an EPS/Cogs exchange, management further explained that they saw coffee elevation in the first half and that the “implications of tariffs… run through our inventory,” but they expected both to abate toward the back end of the year. ⁶
• They also described that coffee “always lags” in financials due to purchasing/hedging, implying the cost impact timing matters for the second-half margin outlook. ⁷⁶

5) China transition to a licensing/joint venture structure changes both revenue reporting and margin profile

A structural factor behind the outlook change is Starbucks’ China transition:

• Starbucks said its guidance now assumes a joint venture licensing structure in China, and it expected China-related revenues to be less than 20% of what they would have previously reported in the back half of the fiscal year. ⁵
• As a result of that accounting/structure change, management expected consolidated fiscal 2026 net revenues to be roughly flat year-over-year. ⁵
• They also indicated that the China transition to a JV structure is expected to be relatively EPS-neutral this fiscal year. ⁸
• Additionally, Starbucks explained operationally that the Boyu transaction was closed after Q2; beginning in Q3, retail operations would be deconsolidated and reported within the licensed portfolio, and China stand-alone revenue/comps reporting would cease. ⁷

So, guidance changes needed to reflect both the lower reported revenue contribution from China under JV/deconsolidation and the offsetting margin contribution expected from the JV economics. ⁵⁷

6) Unit growth expectations (development pipeline) remain part of the guidance framework

While the guidance emphasis was comps/EPS, unit growth targets were also maintained:

• Starbucks still expected ~600 to 650 net new coffeehouses for the fiscal year, and management expected International to accelerate to 450 to 500 net new coffeehouses over the next 2 quarters in fiscal 2026. ⁸
• It also expected China to comprise close to half of the International net new units. ⁸

These targets are consistent with the “global comp improvement” narrative and the expectation that operational discipline will translate into repeatable growth. ¹⁸

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Bottom line

Starbucks’ Q2 2026 guidance change (higher fiscal 2026 global comp and raised EPS range) was primarily supported by observed Q2 turnaround progress (top-line growth and comp strength) and was underpinned by an expected margin build from cost savings + sales leverage + easing coffee/tariff pressures in the back half, while simultaneously adjusting for China’s shift to JV/licensing economics that affects reported net revenue and is expected to be approximately EPS-neutral for the year. ¹⁵⁸⁷²⁶