Starbucks' Profit, Guidance Up

Starbucks ( SBUX) posted a 53% rise in fiscal second-quarter earnings Wednesday and raised its profit outlook for 2004.

The Seattle-based coffee chain said net income rose to $79.5 million, or 19 cents a share, in the fiscal second quarter, up from $52 million, or 13 cents a share, in the same period last year. Analysts had expected the firm to earn 17 cents a share.

"During the second quarter, all areas of our business, from our retail operations both domestically and internationally, to our specialty businesses delivered strong financial performance," said President and CEO Orin Smith. "Company-operated retail stores posted the strongest quarterly comparable-store sales gain for the company in more than 10 years."

Net revenues increased 30% to $1.2 billion. Same-store sales grew 12% in the quarter.

Looking ahead, Starbucks said it now expects earnings per share to range between 90 cents and 91 cents, up from a prior range of between 86 cents and 87 cents. Both targets include a 2-cent-a-share benefit from the 53rd week in fiscal 2004.

The company now expects year-over-year earnings per share growth to range between 20% to 25% in the third quarter, and it projects 40% to 45% growth for the fourth quarter.

Starbucks plans to open 1,300 new stores in fiscal 2004, and forecasts revenue growth of 25% to 30% this fiscal year. For the remainder of the year, the firm said same-store sales growth "may continue to exceed the company's target range of 3% to 7%."

Over the long term, however, Starbucks said it continues to expect revenue growth of 20% and same-store sales growth of 3% to 7%. The firm expects to spend $475 million on capital expenditures.

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