And those higher milk costs? Just pass it on, those customers can put it on that new HELOC charge card.
Reuters
Starbucks Profit Rises, Target Raised
Wednesday April 21, 6:39 pm ET
By Chris Stetkiewicz
SEATTLE (Reuters) - Starbucks Corp. (NasdaqNM:SBUX - News), the world's largest coffee shop chain, on Wednesday posted a 53 percent quarterly profit increase and raised its full-year earnings target by 4 cents a share.
The company cited strong sales gains at existing stores, where several programs are speeding customers through long lines, as well as a modest profit in its international unit, which had a loss a year ago.
Seattle-based Starbucks reported earnings in its fiscal second quarter ended March 28 of $79 million, or 19 cents a share, beating the consensus forecast of 17 cents a share from analysts polled by Reuters research, a unit of Reuters Group Plc.
The company earned $52.1 million, or 13 cents a share, a year earlier.
Revenue rose 30 percent in the quarter to $1.2 billion from $954 million.
Starbucks' international unit, which it expects to post a full-year pretax profit for the first time in 2004, earned $8.4 million in the quarter.
Its shares dipped to $37.20 after closing at $37.23 on Nasdaq before the earnings announcement.
Citing the second-quarter results, Starbucks raised its full-year profit target to between 90 cents and 91 cents a share from 86 cents to 87 cents previously.
The company said rising milk prices could boost its costs by $10 million to $15 million in the second half of 2004, though overall costs as a percentage of revenue were relatively stable in the second quarter, helped by more efficient distribution.
"That (milk prices) is a significant issue for us. It's ... the primary negative factor that we're dealing with right now, Chief Financial Officer Michael Casey told analysts and reporters on a conference call.
Milk accounts for less than 10 percent of Starbucks costs of goods sold, including steamed milk in lattes and a variety of creamy, sweet coffee-flavored drinks.
Company executives are confident that Starbucks can keep opening about four stores a day without saturating current markets, including the United States, where it has more than 5,600 of its more than 7,800 cafes.
"We continue to believe that the North American market is much, much larger than anyone is giving us credit for," Chief Executive Orin Smith said.
In addition to filling in its current markets, Starbucks is looking to expand in Eastern Europe, having already entered most Western European countries, including Britain, France and Germany.
"We are especially interested in Eastern Europe right now. We think there are great opportunities for us in that area. We are very, very interested in Russia at this point," Smith said. |
