Starbucks (SBUX) gave its investors another shot of financial caffeine late Thursday
after putting up another quarter of strong profits, continuing the company's
string of growth.
The coffee chain reported 25.9% higher net income of $390.4 million on 11.3%
higher revenue of $3.6 billion.
Including a 3-cents-a-share gain from a sale of a stake in a Mexican joint
venture, the earnings were 51 cents a share, matching expectations for a
48-cents-a-share profit.
Shares of Starbucks gained in regular trading ahead of its after-the-close
earnings release, adding 67 cents to close at $60.50. In after-hours trading,
the stock fell nearly 3%. Shares of Starbucks are up 12.8% this year.
"Starbucks has never been better positioned," CEO Howard Schultz said in the
earnings release.
Investors were hoping Starbucks could keep up its string of strong revenue
gains, making it a contrast to other companies struggling to grow amid the
sluggish economy.
So far, with nearly half the companies in the Standard & Poor's 500 having
reported results, revenue growth is coming in at 2.9%, says S&P Capital IQ.
Starbucks' revenue has grown by more than 10% for each of the last six quarters,
including 10.6% growth in the December quarter.
The company is positioned to benefit from increased discretionary spending on
small items as well as the rise in specialty coffee, says Jim Yin, analyst at
S&P Capital IQ, in a report.
That stronger top-line growth along with cost controls has trickled to the
bottom line. The company has been consistently delivering higher net income,
including a 13.1% increase in the December quarter and an 18.5% boost in net
income in the April quarter of 2012.
Additionally, the company raised its expectations for earnings for the year,
bumping them to $2.12 to $2.18 a share, up from the $2.06 to $2.15 it previously
said it was shooting for.
"Continued strength in our U.S. operations, despite ongoing uncertainty in the
macro environment, has fueled our performance," said Troy Alstead, chief
financial officer, in the statement.
Strong growth in U.S. locations was a key part of the report. The company posted
7% higher sales at U.S. locations open at least a year. Starbucks is continuing
to adjust its loyalty program, and in the U.S., the number of visits and the
amount consumers spent each visit rose. In the critical Asia-Pacific region,
sales at stores open at least a year rose 8%.
It's just the latest strong quarter in what is expected to be a strong fiscal
year ending in September. The company should see sales at stores open at least a
year post 7% growth in the Americas and an even stronger 11% in China, Yin says.
The company is also benefiting by jumping into the single-cup homecoffee-brewing
business, he says.
