By Maria Armental
Starbucks Corp. reported higher earnings for its fiscal second
quarter as customers continued to indulge in specialty coffees and
baked goods.
Global same-store sales grew 6%, versus the 5.4% estimate from
analysts polled by Thomson Reuters.
The Seattle-based coffeehouse chain raised its outlook for the
year, calling for $2.62 to $2.68 in earnings. It affirmed its
target of revenue growth of 10% or greater. The company had boosted
its earnings view in January to $2.59 to $2.67 and backed its prior
outlook for at least 10% revenue growth and global same-store sales
rising in the mid-single digits.
Starbucks has been diversifying in recent years from its
traditional coffee business by adding more packaged products and
food. For example, in addition to its acquisitions of loose-leaf
tea retailer Teavana and San Francisco bakery La Boulange,
Starbucks joined with Danone SA last year to sell Greek yogurt
parfaits and other items.
Starbucks is also looking to grow geographically, with plans to
open thousands of locations in the Americas and China in the coming
years.
Overall, the company reported a profit for the period ended
March 30 of $427 million, or 56 cents a share, up from $390.4
million, or 51 cents a share, a year earlier. In January, the
company said it expected per-share earnings of 54 cents to 55
cents, slightly below estimates at the time.
Net revenue rose to $3.87 billion, versus the consensus estimate
of $3.95 billion.
Domestic sales continued to drive revenue growth, the company
said, noting its loyalty program has helped with value perception
and driven customer traffic.
Same-store stales was the key indicator that hurt competitor
Dunkin' Brands Group Inc., which earlier Thursday reported a 3.5%
drop in quarterly earnings, blaming bad winter weather for
deterring customers.
By region, Starbucks said same-store sales for the latest
quarter jumped 7% in the company's China and Asia-Pacific
businesses. Same-store sales in the Americas rose 6%, while Europe,
Middle East and Africa sales rose 6%, the highest growth in the
region in 14 quarters, the company said.
Operating margin widened to 16.6% from 23.5%.
The company affirmed its earnings guidance for the current
quarter.
Write to Maria Armental at maria.armental@wsj.com
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