Starbucks stays hot in U.S., Asia; shares rise

Fri Jan 25, 2013 6:47am IST

A paper cup is seen in Starbucks' Vigo Street branch in Mayfair, central London January 11, 2013. REUTERS/Stefan Wermuth

A paper cup is seen in Starbucks' Vigo Street branch in Mayfair, central London January 11, 2013.

Credit: Reuters/Stefan Wermuth

Related Topics

Stocks

   
Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

REUTERS - Starbucks Corp reported stronger-than-expected sales in the United States and Asia despite economic uncertainty worldwide, offsetting unexpected costs including the bill for cleaning up after Superstorm Sandy.

Shares in the world's biggest coffee chain rose 1.9 percent in after-hours trade on Thursday, even though the company's first-quarter profit matched but did not exceed Wall Street estimates and it merely repeated its forecasts for the full year. Starbucks often tops profit expectations and raises forecasts.

Seattle-based Starbucks is frequented by affluent consumers with extra money to spend on premium drinks like lattes and mochas, but the chain's executives joined industry peers in adopting a cautious stance for the new year, largely because of concerns that this month's U.S. payroll tax increase could depress consumer spending.

It's too early to tell whether the tax hike that is reducing take-home pay will have an impact on the company's business, Chief Financial Officer Troy Alstead told Reuters.

Starbucks' results landed a day after fellow restaurant bellwether McDonald's Corp reported an unexpected rise in December sales at established U.S. restaurants. But McDonald's also warned that its January same-restaurant sales would fall as it follows strong year-ago results and fights for the business of budget-conscious diners.

"We don't know where the consumer is going to shake out this year," Edward Jones analyst Jack Russo said.

U.S. AND ASIA STRONG

Starbucks reported net earnings of $432.2 million, or 57 cents per share, for the fiscal first quarter that ended December 30, meeting the average analyst estimate compiled by Thomson Reuters I/B/E/S. That was up from $382.1 million, or 50 cents per share, a year earlier.

Overall revenue jumped almost 11 percent to $3.80 billion during the quarter, which is Starbucks' biggest for sales.

Global sales at stores open at least 13 months were up 6 percent - topping the 5.5 percent rise analysts polled by Consensus Metrix had expected. Performance was helped by a 4 percent increase in traffic and a 2 percent increase in average spending per visit.

Same-store sales rose 7 percent in the U.S.-dominated Americas region - which contributes about 75 percent of overall revenue at Starbucks - and topped analysts' estimate of 5.9 percent.

Sales at established shops were up 11 percent in the China/Asia Pacific region and down 1 percent in Europe, the Middle East and Africa. Results from Asia were better than expected, while EMEA was a bit worse.

Executives said they were pleased with the performance of the new Verismo single-cup coffee and espresso brewer. More than 150,000 Verismo brewers were sold in the first quarter, CFO Alstead told Reuters.

Overall operating margin expanded 40 basis points to 16.6 percent, despite a contraction in the Americas due to expenses related to Superstorm Sandy in the United States, litigation and a large conference the company hosted.

Seattle-based Starbucks reiterated its forecasts for the full year, including earnings per share of $2.06 to $2.15.

Shares in Starbucks rose 1.9 percent to $55.62 in extended trading after closing at $54.57.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Phil Berlowitz)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Vodafone Ruling

Vodafone Ruling

Government will not appeal Vodafone tax ruling   Full Article 

Indian Railways

Indian Railways

Private refiners compete with state firm to sell diesel to railways   Full Article 

Ranbaxy Results

Ranbaxy Results

Dec-quarter net loss widens on forex loss  Full Article 

Market Eye

Market Eye

Sensex, Nifty retreat from record highs on profit-taking.  Full Article 

Tech Talk

Tech Talk

Apple takes high road in China smartphone standoff with Xiaomi.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage