By Tess Stynes
Starbucks Corp. reported its revenue rose 10% in the final
quarter of the coffee company's business year, thanks to a steady
increase in new stores and its continuing efforts to woo a growing
niche of coffee aficionados.
But Wall Street's expectations for top-line growth have
accelerated more quickly, and Starbucks shares declined 5% after
hours.
The company also gave a weaker-than-expected outlook for its
current quarter, which includes the key holiday season, and its
recently started new year.
Starbucks has been diversifying in recent years from its
traditional coffee business by adding more packaged products and
food and has expanded rapidly. The company opened 503 net new
stores globally, ending the September quarter with 21,366 stores
across 65 countries.
In the second half of next year, customers in certain markets
will be able to use the company's coming mobile ordering and
payment app to have food and drinks delivered to them. "Imagine the
ability to create a standing order of Starbucks delivered hot to
your desk daily," Starbucks Chief Executive Howard Schultz told
investors on Thursday's earnings call. "That's our version of
e-commerce on steroids."
The company recently unveiled efforts to attract consumers
seeking more upscale brews. It introduced a new line of
single-origin coffees for those customer interested in where their
coffee is grown. Starbucks also plans to open 100 specialty
Starbucks stores selling only its small-batch "reserve"
coffees.
The company raised prices earlier this year on some packaged
coffee and in-store beverages in response to a jump in coffee
costs, but that hasn't appeared to hurt sales.
The Seattle-based coffeehouse chain said sales at company-owned
stores open at least 13 months rose 5% in the September quarter. By
region, sales rose 5% in the Americas, China and the Asia, and
Europe, Middle East and Africa as well.
Overall, Starbucks reported a profit for the period ended Sept.
28 of $587.9 million, or 77 cents a share, compared with a loss of
$1.23 billion, or $1.64 a share, in the year-earlier period when
the company notched a $2.8 billion litigation charge tied to a
dispute with Kraft Foods.
Excluding items, earnings rose to 74 cents a share from 60
cents, in line with the company's expectation of 73 cents to 75
cents a share.
Revenue increased to $4.18 billion, missing the estimate of
$4.23 billion from analysts polled by Thomson Reuters.
Late last year an arbitrator handed Starbucks a bitter defeat in
its three-year fight with Kraft, saying the coffee giant must pay
nearly $2.8 billion for ending a failed partnership. The dispute
centered on an agreement Starbucks entered with Kraft in 1998 to
distribute and market Starbucks brand coffee in U.S. grocery
stores--and, later, in overseas markets.
For the quarter ending in December, Starbucks forecast per-share
earnings of 79 cents to 81 cents, below the 83 cents expected on
Wall Street.
Meanwhile, for the year, Starbucks raised its revenue guidance,
partly tied to its plan to take full ownership of its Japanese
operations , guiding for 16% to 18% growth, versus its previous
call for at least a 10% increase.
As for the bottom line, Starbucks narrowed its outlook,
projecting earnings of $3.08 to $3.13 a share, an increase of 16%
to 18%. The company had previously guided for 15% to 20% growth.
Analysts, though, projected $3.16 a share.
Julie Jargon contributed to this article.
Write to Tess Stynes at tess.stynes@wsj.com
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