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SEATTLE - Starbucks said its fiscal third-quarter profit climbed 9 per cent, in spite of rising dairy prices and stalled US store traffic, sending its shares up nearly 2 per cent in after-hours trading.
The broader US market also rose in a last-minute rally as investors snapped up shares beaten down by worries over deteriorating credit conditions.
For the three months ended July 1, Starbucks earnings rose to US$158.3 million ($209.3 million), or US21c per share, from US$145.5 million, or US18c per share, during the same period last year, the company said yesterday.
The results matched Wall Street's expectations. Analysts surveyed by Thomson Financial forecast a profit of US21c per share.
Total revenue, which includes everything from freshly made lattes to bags of coffee on grocery store shelves, jumped 20 per cent to US$2.36 billion from US$1.96 billion in the year-ago quarter, falling just short of analysts' estimates of US$2.39 billion in sales.
Sales at Starbucks' 14,396 stores around the world jumped 21 per cent to US$2.01 billion from US$1.66 billion last year.
The company opened 668 new stores in the quarter, and announced plans to continue expanding at an equally blistering pace next year.
Starbucks' same-stores sales, or sales at stores open for at least 13 months, were 4 per cent higher than last year's third quarter, at the low end of the company's guidance for comparable store sales for the year.
In the US, the number of purchases at Starbucks locations grew less than 1 per cent, but analysts were satisfied with even a slight improvement over the zero growth in the first quarter.
"That certainly takes away some of the doomsday scenarios that some investors were painting around Starbucks," said William Blair & Co analyst Sharon Zackfia.
Transactions at stores outside the United States rose a healthier 5 per cent in the quarter.
The company announced plans to increase the number of new international stores to 900 in fiscal 2008, from an expected 700 this year, while holding US store openings steady at 1700.
In June, the company warned full-year earnings could come in at the low end of its guidance for the fiscal year, in part due to rising dairy costs.
The company raised drink prices by US9c in July.
Chief financial officer Michael Casey said it was possible that the price increase would hurt sales in the short-term, but he expected no long-term drop-off.
Starbucks stuck to earlier guidance for earnings of US87c to US89c per share for the full fiscal year, and for same-store sales growth from 3 per cent to 7 per cent.
For fiscal 2008, the company said it expected revenue to grow about 18 per cent next year, slower than this year's predicted 20 per cent growth.
Starbucks also forecast same-store sales growth of 3 per cent to 7 per cent in 2008.
- AAP
