Starbucks banks $123.7M in quarter
Starbucks Corp., the largest U.S. chain of coffee shops, said fourth-quarter profit rose 21 percent on sales of espresso drinks and new food offerings.
Net income increased to $123.7 million, or 16 cents a share, from $102.6 million, or 12 cents, a year earlier. Revenue in the period ended Oct. 2 climbed 14 percent to $1.66 billion, the Seattle-based company said yesterday in a statement. Earnings beat analysts' estimates.
Comparable-store sales jumped 8 percent on demand for custom espressos, new breakfast and lunch items and pumpkin-flavored drinks. Chief Executive Jim Donald added 570 stores, the most ever, as the company expanded in states such as California and Texas and in international markets including China.
"Everywhere you look there's a Starbucks going up, and it's not showing any signs of saturation," said Donald Gher, chief investment officer of Coldstream Capital Management in Bellevue, Wash., where he oversees $900 million including 359,000 Starbucks shares.
Shares of Starbucks, which has about 10,400 stores, dropped 27 cents to $30.95 after the close. They rose 80 cents to $31.22 in Nasdaq Stock Market composite trading. They are little changed this year. Earnings were announced after regular U.S. trading.
William Blair & Co. analyst Sharon Zackfia expected 15 cents a share in profit. She is top-ranked for accuracy by StarMine Professional. The average of 17 analysts surveyed by Thomson Financial was also 15 cents. Thomson declined to disclose the parameters of the estimates included in its average.
Gross margin, or the percentage of sales left after subtracting the cost of goods sold, widened to 59 percent from 57.7 percent a year earlier.
Dunkin' Donuts, which is owned by Pernod Ricard SA and is for sale, has created new drinks such as Turbo Ice, a mix of iced coffee and espresso, to compete with Starbucks. The doughnut chain is also offering more hot food items such as steak, egg and cheese bagel sandwiches and southwestern-chicken panini.
Caribou Coffee Company Inc., the second-largest coffee chain in the United States, said on Nov. 2 third-quarter sales rose 26 percent to $48.8 million. The Minneapolis-based company, which first sold stock to the public in October, posted a net loss of $1.2 million. Caribou has 348 stores.