IE 11 is not supported. For an optimal experience visit our site on another browser.

Accounting change cools Starbucks earnings

/ Source: The Associated Press

Starbucks Corp. said Wednesday its fourth-quarter profit slipped 5 percent, blaming the dip on newly adopted accounting changes.

For the 13 weeks ended Oct. 1, the world’s largest specialty coffee retailer posted net earnings of $117.3 million, or 15 cents a share, compared to $123.7 million, or 16 cents a share, for the same period a year ago.

Excluding a change in the way it accounts for the cost of ending leases, Starbucks said it earned $134.5 million, or 17 cents a share, in line with estimates of analysts polled by Thomson Financial.

Revenue for the quarter was $2 billion, up 20 percent from $1.66 billion in the same period last year, and slightly shy of analysts’ estimate of $2.02 billion.

For the full fiscal year, Starbucks said it earned $564.3 million, or 71 cents a share, up from $494.5 million, or 61 cents a share, in fiscal 2005. Before the accounting change, the company said it earned $581.5 million, or 73 cents a share in profits, up 18 percent from $494.4 million, or 61 cents the previous year.

Revenue for fiscal 2006 was $7.8 billion, up 22 percent from $6.4 billion the year before.

Starbucks opened 2,199 stores during fiscal 2006, boosting its worldwide store total to 12,440.

Jim Donald, Starbucks’ president and chief executive, said customer demand remains strong both at home and abroad and called the company’s operating results “strong.”

“We demonstrated the strength of our business model as we opened a record number of new stores around the world, which contributed to strong top-line growth, and we enhanced and expanded our product offerings through innovation and entry into new channels,” Donald said.

Starbucks shares closed up 46 cents, or 1.2 percent, at $39.43 on the Nasdaq Stock Market on Wednesday, then fell $2.09 to $37.34 in after-hours trading. The stock has traded in a 52-week range of $28.72 to 39.88.