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.
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