Specialty coffee retailer Starbucks Corp. on Wednesday reported a 27 percent increase in profit for the second quarter and raised its earnings outlook for the year.
Net income rose to $100.5 million, or 24 cents per share, from $78.9 million, or 19 cents per share, a year ago. The result matched the average estimate of analysts surveyed by Thomson Financial
Revenue rose 22 percent to $1.52 billion from $1.24 billion and was slightly ahead of analysts' estimates of revenue of $1.51 billion. Starbucks shares rose $1.59, or 3.4 percent, to $48 in after-hours trading.
Revenue at company-operated stores rose 22 percent to $1.3 billion, as sales at stores open for at least on year rose 7 percent. Starbucks said the jump in total revenue was attributable to the opening of 669 new stores in the last 12 months.
Specialty revenue rose 23 percent to $235 million as revenue from licensing its brand for other food and beverage products surged 32 percent due to higher product sales and royalty revenues.
The company said income from equity investees increased to $16 million from $12 million, primarily due to volume-driven operating results for its North American Coffee Partnership, which produces bottled Frappuccino and Starbucks DoubleShot coffee drinks, as well as improved results from international ventures due to new licensed retail store openings, particularly in Japan.
Starbucks raised its earnings forecast for all of fiscal 2005 to $1.17 to $1.19 per share, up 2 cents from its previous outlook. Excluding 3 cents per share earned during an extra week in fiscal 2004, the forecast represents earnings growth of 27 percent to 29 percent above the 92 cents earned last year. The raised forecast comes as the company now anticipates fourth quarter earnings will top earlier estimates. The company maintained its estimate for the third quarter. Analysts currently expects earnings to come in at the midpoint of the updated forecast.
Excluding an extra week in 2004, Starbucks expects revenue to grow at least 20 percent in fiscal 2005. "While the Company's longer term target range of three percent to seven percent comparable store sales growth remains unchanged, Starbucks currently expects the remainder of fiscal 2005 to be at or slightly above the high end of that range," the company said. Analysts' currently anticipate revenue will grow 20 percent to $6.38 billion from last year's $5.29 billion.
The company still expects to open about 1,500 new stores worldwide in fiscal 2005, with 550 new company locations and 525 licensed operations opening in the U.S.