You are here
SEATTLE -- Starbucks Corp. posted its first quarterly gain in U.S. same-store sales in two years. Reuters reported the coffee chain's latest financial report signals that recession-weary consumers are spending more on small, daily luxuries.
Starbucks also raised its 2010 earnings forecast after fiscal first-quarter profits topped Wall Street expectations.
Sales at U.S. restaurants open at least 12 months rose 4 percent during the quarter ended Dec. 27, boosted by the company's new Via instant coffee, holiday drinks and select price increases, according to Reuters. The last time Starbucks posted a gain in U.S. same-store sales was the quarter ended September 2007.
Chief Financial Officer Troy Alstead told Reuters the same-store sales improvement was both broad-based and sustainable.
"It still is a luxury you can afford," said Alstead. "You're not giving up your retirement to be able to enjoy that great experience every morning," he said of the $3 and $4 espresso drinks that are the backbone of the Starbucks' business.
Still, the company is aware of the "profound economic uncertainties" in the global economy, Chief Executive Howard Schultz said on a Wednesday conference call.
Executives expect 2010 same-store sales growth to be modestly positive as high unemployment and lingering problems with home mortgages persist, reported Reuters.
The Seattle-based chain, which slashed costs and shuttered more than 900 outlets in a broad-based restructuring, raised its forecast to call for earnings per share in the range of $1.05 to $1.08, excluding about 3 cents per share in restructuring charges, an increase of more than 30 percent from the previous year.
Analysts were surprised at the amount of increase projected by the chain.
Starbucks' net income more than tripled to $241.5 million, for the fiscal first quarter that covers the holiday season. Total net revenue rose 4.1 percent to $2.7 billion.
On Wednesday, Reuters reported that Schultz said the company is now focusing on sharpening operations in its international business and the division that sells prepared foods like bagged coffee, ice cream, Via and bottled drinks.
Starbucks Raises Prices on Most Drinks