A new Starbucks drink suggestion: moolaccino. The specialty-coffee retailer yesterday said its second-quarter profit rose 27. 4 percent to $100.5...
A new Starbucks drink suggestion: moolaccino.
The specialty-coffee retailer yesterday said its second-quarter profit rose 27.4 percent to $100.5 million, or 24 cents a share, and the company raised its fiscal-year profit guidance for the second time this year.
Sales, meantime, grew 22.4 percent to $1.5 billion as the company continued to open more stores and received a bump from a recent beverage price increase.
Starbucks yesterday said it expected to earn $1.17 to $1.19 a share for the fiscal year, up 2 cents from its previous guidance.
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It said comparable store sales — a key retail gauge also known as same-store sales — are expected to climb, also.
Same-store sales rose 7 percent as the company increased the number of customer transactions and the value per order during the quarter.
While Starbucks said it would maintain its long-term, same-store sales target of between 3 and 7 percent growth, it expects to hit the high end of that range during the second half of the year.
McAdams Wright Ragen analyst Dan Geiman said comparable sales growth has slowed over time, but earnings should come in a little higher than his previous estimates.
“The news is reasonably positive going forward,” he said.
Starbucks card transactions represented 15 percent of North American retail sales as customers continued to redeem value-stored cards purchased during the holidays, and the value per order climbed partly due to a recent beverage price increase.
But Chief Financial Officer Michael Casey said the biggest spike came from opening additional stores.
Starbucks launched 669 new company-operated stores and 758 new licensed stores in the past 12 months.
With an average of four stores openings per day, it expects to operate 1,500 new locations by the end of the fiscal year.
The acceleration in openings has not been without expense. U.S. store operating costs represented 42.1 percent of retail revenues for the quarter, up one percentage point from a year ago.
With a long-term goal of expanding to 30,000 stores worldwide, Starbucks has hired more assistant store managers and spent more on training and development.
The company has assistant stores managers in 75 percent of its stores vs. 50 percent a year ago, with the goal that they will run future stores.
“A new Starbucks store can be a $1 million to $2 million business,” Casey said. “That can be daunting challenge for someone who has never run a store before.”
If the company has ramped up its expansion plans, it’s nowhere more evident than in China.
Starbucks Chairman Howard Schultz told analysts yesterday the company would intensify its focus in China due to its large population, sustained economic growth and the projected size of the economy.
Starbucks has more than 300 Starbucks in China, including its first company-operated store in Qingdao.
As it nears its five-year anniversary in Hong Kong and Shanghai next month, the company’s acceptance in China “has exceeded even my high expectations,” Schultz said.
The company’s shares closed yesterday at $46.41, down 20 cents, but rose 2.6 percent to $47.60 in extended trading.
Starbucks results were announced after markets closed.
Monica Soto Ouchi: 206-515-5632 or firstname.lastname@example.org