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Starbucks Profit Rises 19%

Starbucks Profit Rises 19%
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4/26/2012 6:42 PM ET

Starbucks Corp. (SBUX: Quote) said Thursday after the markets closed that its second quarter profit rose 19% from last year, as revenue increased 15% amid growth in all regions.

The company's quarterly earnings per share and its quarterly revenue just managed to beat analysts' estimates.

At the same time, the company raised its full fiscal year 2012 revenue and earnings outlook, but the latest targets trailed analysts' current expectations.

"Starbucks delivered strong growth in the fiscal second quarter, again demonstrating the value of our evolving diversified business model. Revenue growth was driven by continued strong global same store sales and an increasing contribution from our Channel Development segment," said Starbucks CFO Troy Alstead.

Starbucks shares are currently losing 4.96% in after hours trading after closing the day's regular trading session at $60.66, up $1.16 or 1.95%. The shares trade in a 52-week range of $33.72 to $62.00.

The world's largest specialty coffee retailer's same-store sales for the second quarter increased 7%, driven by a 6% increase in traffic and a 1% increase in average ticket.

Starbucks opened 176 net new stores globally, including its 3,000th store in the China/Asia Pacific segment, its first store in Norway and the first Evolution Fresh store in Bellevue, Washington.

Americas segment revenues grew 10% to $2.4 billion in the second quarter, mainly due to an 8% increase in same-store sales. The 8% same-store sales growth was comprised of an 7% increase in the number of transactions and a 1% increase in average ticket.

Second quarter revenues for the EMEA segment rose 14% to $272.4 million, due to incremental revenues from the consolidation of the Switzerland and Austria markets.

China/Asia-Pacific segment revenue jumped 32% to $174.6 million in the second quarter, due to incremental revenues from 98 net new company-operated store openings over the last 12 months, and an 18% increase in same-store sales. The 18% increase in same-stores sales was the result of a 14% increase in the number of transactions and a 4% increase in average ticket. The company recorded its seventh consecutive quarter of over 20% sales growth in China.

Channel Development net revenues surged 57% to $321.5 million in the second quarter, mainly due to sales of Starbucks- and Tazo-branded K-Cup portion packs and the benefit of recognizing the full revenue from packaged coffee sales under the direct distribution model.

Apart from expanding its operations in China, Starbucks is trying to diversify into other areas. Last month, the company inunveiled its first at-home single cup coffee machine Verismo, which will be available in the market this fall. The company will market and sell Verismo machine using its strategic relationship with German-based Krueger GmbH & Co. KG.

For the second quarter ended April 1, 2012, Starbucks reported net income of $309.9 million or $0.40 per share, compared to $261.6 million or $0.34 per share for the year-ago quarter.

On average, 28 analysts polled by Thomson Reuters expected the company to earn $0.39 per share for the second quarter.

Operating margin for the quarter remained flat with last year at 13.5%, as sales leverage offset the increase in commodity costs mainly coffee.

Total net revenues for the second quarter rose 15% to $3.20 billion from $2.79 billion in the same quarter last year. Twenty-six analysts had a consensus revenue estimate of $3.18 billion for the second quarter.

Starbucks also declared a cash dividend of $0.17 per share, payable on May 25 to shareholders of record as of May 9.

The company said it now targets fiscal 2012 revenue growth in the low-teens, compared to its earlier target of about 10% growth. Analysts currently target a revenue growth of 14.20%.

The company also raised its fiscal year 2012 earnings guidance to a range of $1.81 to $1.84 per share from its prior guidance of $1.78 to $1.82 per share. Analysts currently expect the company to earn $1.86 per share for the fiscal year 2012.

Earnings per share growth growth is expected to be about 25% to 29% in the second half of the fiscal year 2012, or $0.45 to $0.46 earnings per share in the third quarter and $0.46 to $0.48 earnings per share in the fourth quarter, reflecting the easing of commodity costs during the period, Starbucks said.

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by RTT Staff Writer

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