Starbucks served up another grande of a financial statement yesterday, reporting a 29 percent jump in quarterly profit even while it invested...
Starbucks served up another grande of a financial statement yesterday, reporting a 29 percent jump in quarterly profit even while it invested heavily in expansion.
Worldwide, Starbucks had 9,671 stores on July 3. Company executives detailed plans to step up worldwide growth by 20 percent, going from 1,500 new stores in the current fiscal year to 1,800 next year.
Executives talked excitedly about opportunities in such diverse places as Ireland, Jordan and China.
But the core of the company’s success, analysts said, remains its ability to grow in its most mature markets.
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Kristine Koerber, a senior analyst at JMP Securities in San Francisco, noted that Starbucks has managed to increase same-store sales — those open at least a year — for more than 10 consecutive years.
“There really isn’t another company out there with a track record like Starbucks,” Koerber said. “More importantly, the company’s really only in the fourth inning or so of the game.”
Chief Executive Jim Donald said company officials were surprised to find that the store with the highest first-year profitability turned out to be near Redmond, where there are 25 Starbucks within a five-mile radius.
“It was an unbelievable wakeup call for us,” Donald said. “We think the opportunities out there just abound.”
Starbucks has nearly 7,000 stores in the United States and has said it plans to have 10,000 to 15,000 domestic locations.
“That number’s looking a little bit conservative at this point,” said Dan Geiman, an analyst with McAdams Wright Ragen in Seattle.
Third-quarter profit of 31 cents a share topped analysts’ estimate by a penny and outshone the 24 cents a share of the year-ago quarter.
Profit was $125.6 million, up 28.7 percent from a year ago. Overall sales grew 21 percent. Same-store sales grew 7 percent, and operating margins grew even though thousands of extra assistant managers were kept on the payroll to have enough managers to run new stores.
Yesterday’s report came after stock exchanges closed for the day, but the news pushed Starbucks stock up nearly 4 percent, to $52 a share, in after-hours trading.
Chairman Howard Schultz said existing stores have benefited from a “significant level of innovation around our core,” with new products like music CDs contributing increasingly to sales.
Stores also have been able to draw customers at all times of day.
“Five, six years ago, we didn’t do much business past 7, 8 o’clock at night, and now we’re doing a ton of business at those hours,” Schultz said. “We have become this third place between home and work.”
Tom Boyer: 206-464-2923 or firstname.lastname@example.org