Skip to main content

SEATTLE, Wash. (


) --


(SBUX) - Get Starbucks Corporation Report

posted better-than-expected revenues after the closing bell Wednesday, but a mixed profit reading led the coffee chain's shares lower in after-hours trading.

Starbucks bumped its dividend up 30% to 13 cents per share, but investors seemed to shrug off the news after the firm posted earnings per share of 27 cents, two pennies shy of Wall Street analysts' average estimate. Excluding one-time charges, earnings were 29 cents per share, in line with expectations. Analysts typically exclude such extraordinary items from their estimates.

Shares of Starbucks fell 2.3% to $25.17 ahead of the report, and tumbled another 2.7% in after-hours trading.

Among the brighter points in Starbucks' report was word its same-store sales in the U.S., a key metric in the retail sector that measures sales at stores open at least one year, jumped 9% in the thirteen weeks ended June 27. Analysts expected an increase of just 6%, compared with a 5% decrease in comp sales in the third quarter last year.

Total revenues came in better than expected at $2.61 billion, driven by growth of 6% in global comps. The average ticket price rose 3% in the U.S. and 2% internationally, also helping to lift the top-line figure.

>>Search for Highest Dividends by Rate or Yield

Starbucks CEO Howard Schultz said he was "particularly pleased" about the increase in store traffic last quarter despite the still-challenging global economic environment.

"Strong performance is enabling us to deliver record results and increase the dividend to shareholders while continuing to innovate and invest in our businesses," he said.

Starbucks expanded further into mass market coffee brands to help it compete with alternatives offered by players like

Scroll to Continue

TheStreet Recommends


(MCD) - Get McDonald's Corporation Report

, which is due to report its quarterly financial results Friday.

McDonald's stole a good chunk of Starbucks' market share when it upgraded its coffee in 2006. The lower priced option from McDonald's became popular among price sensitive customers and created new competition for Starbucks, pushing the average number of customers visiting a Starbucks store lower by around 13% from 2005 to 2007.

>>Cheap Coffee: Starbucks vs. McDonald's

In 2008 McDonald's officially launched its McCafe, further intensifying competition between the brands. The timing of the launch coincided with a period of spending cutbacks among consumers, cutbacks that were already stinging Starbucks. As a result of the discretionary cutbacks and rising competition, Starbucks closed around 890 stores in 2008 and 2009.

Starbucks now plans to open 250 net new stores globally in fiscal 2010, which ends in September, and another 500 net new stores globally in 2011. The coffee giant is also finding success with its inexpensive VIA brand instant coffee and growing sales of Seattle's Best Coffee in fast food and other food service outlets.

-- Reported by Miriam Marcus Reimer from New York.

>>See our new stock quote page.

Follow Miriam Marcus Reimer on


and become a fan of TheStreet on


Copyright 2010 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.