Starbucks raises outlook after strong 2Q

Starbucks Corp. reported on Thursday a 26-percent increase in net income for its second quarter, raising its outlook for the year.

For the quarter ended March 31, the Seattle-based coffeehouse giant reported net income of $390.4 million, or 51 cents per share, compared with $309.9 million, or 40 cents per share, a year ago.

Revenues grew 11 percent to $3.6 billion on global same-store sales that increased 6 percent, driven by a 4-percent increase in traffic and a 2-percent increase in average ticket.

“Innovation and an enhanced customer experience drove strong comp sales and revenue growth, while a laser focus on improving efficiency and controlling costs enabled us to deliver record margins and earnings,” said Howard Schultz, chair, president and chief executive for the company.

Starbucks increased its earnings projections for the year, saying the targeted range will be between $2.12 and $2.18. Previously the company had projected earnings between $2.06 and $2.15. Same-store sales for the year are expected to be in the mid-single-digit growth range globally.

Regionally, the company showed strong results in the Americas, as well as China/Asia Pacific, or CAP. But Europe, the Middle East and Africa, or the EMEA region, remained a challenge with negative same-store sales. Here is a breakdown by region:

The Americas: Revenues were $2.6 billion for the second quarter, rising 10 percent over the prior year, on a 6-percent increase in same-store sales, including a 5-percent increase in transactions and a 2-percent increase in average ticket. The company opened 95 stores in the region during the quarter. Operating margins expanded 220 basis points to 21.1 percent, driven in part by benefits from lower coffee costs.

EMEA: Revenues were $273.2 million, or flat, for the quarter. Though revenues increased at licensed stores, that was offset by declines in company-operated stores, the company said. Same-store sales declined 2 percent, including a 1-percent decline in transactions.

CAP: Revenues were $213.6 million, increasing 22 percent over a year ago, in part because of 516 new store openings over the past year, as well as an 8-percent increase in same-store sales.

Channel Development: Revenues for Starbucks packaged goods grew 7 percent to $343.5 million, mostly driven by the sale of Starbucks and Tazo brand K-cup packs.

In addition, Starbucks said it would report Teavana results under a new “all-other segments” category along with Seattle’s Best Coffee, Evolution Fresh and other platforms. Revenues for the segment were $121.5 million for the quarter.

During the quarter, Starbucks opened 590 net new stores globally, including 337 Teavana stores. The company plans to open 1,650 stores during fiscal 2013, including new Teavana locations.

Contact Lisa Jennings at [email protected].
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