Starbucks’ profit beats Street, misses on sales

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Seattle-based coffee retailer earns 71 cents a share in fiscal first quarter on revenue of $4.24 billion.

Seattle-based coffee retailer earns 71 cents a share in fiscal first quarter on revenue of $4.24 billion.

After markets closed Thursday, Starbucks reported a fiscal first-quarter profit of 71 cents a share, $540.7 million. It was 25% higher than in the same period a year ago, when it reported a profit if 57 cents a share, or $432.2 million.

Starbucks said benefited from lower coffee costs and stronger sales around the world.

Analysts had expected the Seattle-based company would earn 69 cents a share on revenue of $4.3 billion.

Shares rose $1.10, 1.5%, to $74.60 in after-hours trading. During the regular trading session, the stock fell 21 cents, 0.3%, to close at $73.39. In the past 52 weeks, the stock is up about 35%.

The coffee retailer posted revenue for the quarter ended Dec. 29 of $4.24 billion, 12% higher than the $3.79 billion in sales in the same period a year ago but missing Wall Street’s estimates.

Same-store sales growth was up 5% globally and also in the Americas, the company said. In the China and Asia Pacific region, sales were up 8% year over year for the quarter. Operating margins expanded to 19.2% from 16.6% in the same quarter a year ago.

“Starbucks is likely to continue to outpace run-of-the mill retail,” says Glen Petraglia, senior vice president and portfolio manager at Standard Life Investments U.S. office in Boston. “The transformation from a one-trick pony a decade ago to a multi-pronged consumer company is impressive.”

Troy Alstead, the company’s chief financial officer, said in a phone interview with the Associated Press that the slower growth for the last three months of the year was the result of the growing number of people who are choosing to shop online from the convenience of their homes, instead of heading out to stores.

“The impact to us is that there are fewer people out and about in the weeks leading up to Christmas,” Alstead told the AP.

But he downplayed the impact that trend would have on sales growth going forward, saying that the advantage of Starbucks is that its offerings can’t be replicated online and that its loyalty card business is growing.

The company has about 20,000 locations around the world.

Courtesy of USA Today

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