Starbucks Corp. raised its profit forecast for the current fiscal year and plans to speed up new store openings, as strength in its latest quarter and new products, gave the company confidence not seen by many of its peers in the U.S. restaurant industry. Shares of the world’s biggest coffee chain jumped 7.4 per cent to $49.55 (U.S.) in extended trading.
The results were stronger than others in the restaurant industry, including McDonald’s Corp, which have largely been a string of disappointments and diminishing expectations as some of the sector’s top performers grapple with the still weak economy and increasing competition from resurgent rivals.
Starbucks set its new earnings per share forecast for fiscal 2013 at $2.06 to $2.15, up from $2.04 to $2.14 per share, previously.
It now plans to open 1,300 net new stores globally, up from 1,200.
“Starbucks’ solid Q4 performance has ideally positioned us to go into the holiday with strong momentum,” Chief Executive Howard Schultz said on a conference call with analysts.
Starbucks net income rose 0.1 per cent to $359-million, or 46 cents per share, topping analysts’ average forecast by a penny, according to Thomson Reuters I/B/E/S.
Global sales at stores open at least 13 months rose 6 per cent, helped by a 5 per cent increase in traffic and a 1 per cent rise in average spending per visit. That topped the 4.97 per cent rise analysts polled by Consensus Metrix had expected.
Same-store sales rose 7 per cent in the Americas. Analysts polled by Consensus Metrix had expected same-store sales in the Americas to rise 5.10 per cent.
“Those Americas comps were stronger than their Komodo dark roast. A big surprise to everyone, especially given the slowdown at Chipotle and many others in last part of September,” Investment Technology Group restaurant analyst Steve West said.
Over all, revenue rose 11 per cent to $3.36-billion.
In the coming months, Starbucks is counting on newer products like Evolution Fresh juices and lightly caffeinated, low calorie fruit-flavored Refreshers drinks to keep boosting sales. The company has also recently begun selling its Verismo single-serving brewer and coffee and milk pods to be used in the machine.
Asked if the company’s results will be hurt by Hurricane Sandy, Chief Financial Officer Troy Alstead said: “Over the course of the quarter no, it will not be a meaningful impact to us.”
Starbucks has reopened most of the 1,000 stores that it shuttered as the super storm approached, Alstead said.
The current holiday quarter is a key period for sales.
Separately, Starbucks also defended its tax strategy in the UK. Earlier this month, Reuters revealed that Starbucks had paid only 8.6 million pounds of income taxes on 3.1 billion pounds of sales since 1998, by reporting consistent losses, even as it told investors the UK was a profitable market.
Michelle Gass, Starbucks president for Europe, the Middle East and Africa said the company has never avoided paying taxes and that the company adheres to local laws.
“We look forward to continuing to clarify our position about our European tax position in the days and weeks to come,” Gass said.Report Typo/Error