Starbucks profit up on more visits
Starbucks Corp
Shares in the world's biggest coffee chain rose 1.6 percent on Thursday after it also reported better-than-expected earnings for its fiscal third-quarter ended July 3.
Sales at U.S. cafes open at least 13 months jumped 8 percent in the latest quarter, more than the 5.3 percent rise analysts expected.
The world's biggest coffee chain gets roughly 80 percent of its revenue from the United States, where traffic was up 6 percent and average spending per visit rose 2 percent.
Chief Financial Officer Troy Alstead told Reuters that menu price increases accounted for the bigger part of the rise in spending, but also that customers were buying more food.
Starbucks targets more affluent consumers than the typical U.S. fast-food chain.
Those customers have fared better than their lower-income counterparts as the U.S. economy sputters, and they have resumed spending on premium items like $4 lattes and organic foods -- as evidenced by strong same-store sales results from chains like Starbucks, Chipotle Mexican Grill
Same-restaurant sales rose 5 percent for Starbucks' international business during the quarter.
Starbucks shares, which also have benefited from a massive restructuring that shuttered more than 900 cafes and slashed costs, are up 60 percent from a year ago.
KEURIG FOR THE HOLIDAY
Wall Street is enthusiastic about Starbucks' new partnership with Green Mountain Coffee Roasters Inc
The companies plan to begin selling Starbucks coffee and Tazo tea for Keurig machines at wholesale clubs, drugstores and supermarkets in North America this autumn, in time for the important winter holiday season.
Alstead said the partnership would generate 3 cents to 5 cents in incremental earnings per share in the coming fiscal year.
Seattle-based Starbucks boosted its earnings forecast for this fiscal year to $1.50-$1.51 per share from $1.46 to $1.48 a share, previously. Analysts, on average, were expecting a fiscal 2011 profit of $1.50 per share.
It also forecast a 15 percent to 20 percent increase in earnings per share in 2012 and a 10 percent increase in revenue. The forecast is based on mid-single digit comparable store sales growth and the opening of net 800 new stores.
The 2012 forecast includes the contribution from the Green Mountain deal.
Alstead said Starbucks has locked in coffee prices for the coming fiscal year as the market for beans remains volatile.
The company still expects commodity costs, particularly coffee, to take a 22-cent per share bite out of fiscal 2011 earnings.
Coffee prices in '12 will be higher than '11 to the tune of 21 cents a share, Alstead said.
Starbucks' third-quarter net income rose 34 percent to $279.1 million, or 36 cents per share, beating analysts' average estimate by 2 cents per share, according to Thomson Reuters I/B/E/S.
Revenue rose 12 percent to $2.93 billion.
Shares rose to $40.60 in after-hours trade from their Nasdaq close of $39.98.
(Reporting by Lisa Baertlein, editing by Bernard Orr)
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