By Anna Prior
Starbucks Corp. reported fiscal first-quarter earnings that rose
25% as customers continued to shell out for the coffee company's
cappuccinos and lattes, though the sales increase was slightly
below expectations.
Still, for the recently started fiscal year, Starbucks raised
its per-share earnings guidance to $2.59 to $2.67, compared with
its October view of $2.55 to $2.65 a share. The company backed its
prior view for 10% or greater revenue growth, and for global
same-store sales growth in the mid single digits.
Starbucks has recorded stronger sales trends in the U.S. than
most of its competitors. The company has noted that the wide
adoption of its loyalty program has helped its value perception and
driven customer traffic.
In December, Starbucks said it expected record purchases and
activations of its Starbucks Cards on the Thursday before
Christmas, anticipating a reprise of the previous year, when more
than 2 million cards were purchased in the U.S. and Canada on that
Thursday.
Global same-store sales grew 5%, below the 5.9% growth projected
by analysts polled by Consensus Metrix.
Starbucks has been working to diversify its traditional coffee
business by expanding to more packaged products and food, as
highlighted by its recent plans to partner with Danone SA to sell
Greek yogurt parfaits and other similar items. The company also
recently purchased loose-leaf tea retailer Teavana and a San
Francisco Bay-area bakery.
The company also has made a push to expand geographically,
looking to open thousands of locations in the Americas and China in
coming years.
Starbucks said same-store sales for the latest quarter jumped 8%
in the company's China and Asia-Pacific businesses, compared with
expectations for a 7.7% increase. Same-store sales in the Americas
rose 5%, below expectations for 6.4% growth, while Europe, Middle
East and Africa sales rose 5%, topping expectations for a 2%
increase.
Overall, the company reported a profit of $540.7 million, or 71
cents a share, up from $432.2 million, or 57 cents a share, a year
earlier. Starbucks in October had forecast per-share earnings of 67
cents to 69 cents.
Net revenue rose 12% to $4.24 billion.
Analysts polled by Thomson Reuters had forecast revenue of $4.29
billion.
Operating margin widened to 19.2% from 16.6%.
The company reaffirmed its second-quarter outlook from October,
and said it expects per-share earnings for the third quarter of 64
cents to 66 cents, and per-share earnings for the fourth quarter of
70 cents to 75 cents. Analysts were looking for 68 cents a share
and 72 cents a share for the third and fourth quarters,
respectively.
Starbucks stock has fallen about 11% since trading at all-time
highs in November. Through Thursday's close, the stock has risen
35% in the last 12 months.
Write to Anna Prior at anna.prior@wsj.com
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