Starbucks reports better first-quarter results, ends two-year downturn in traffic

The Associated Press ~ staff The News
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CHICAGO - Customers dragged down Starbucks Corp.'s fortunes for two years, buying fewer lattes and making fewer trips to its stores.
But they began returning to the world's largest coffee chain late last year. And that helped the company serve up a double-shot of optimism Wednesday when it announced the increase in sales in shops open at least a year - its first since early 2008 - and a tripling in quarterly profit.
After a three-prong strategy of closing hundreds of locations, laying off thousands of workers and labouring to tweak its menu, the world's largest coffee company's revenue edged up too.
Chairman and CEO Howard Schultz promised to turn to its shops abroad with that same level of attention.
"We're dedicated to bringing the same laser-focus we brought to our U.S. business ... to these businesses in 2010 and beyond," Schultz told investors on a conference call Wednesday after the company reported its fiscal first-quarter results.
"Despite our strong showing, we have much more work to do," Schultz said, adding he hopes to make similar improvements, particularly in the U.K., Canada and China.
For the three months that ended Dec. 27, Starbucks earned $241.5 million, or 32 cents per share. During the same period a year earlier, when the recession was in full force, Starbucks earned $64.3 million, or 9 cents per share.
Its revenue rose 4 per cent to $2.72 billion.
"We're extremely pleased with the progress we've made in this period of time," CFO Troy Alstead told The Associated Press in an interview. "We've come a long way in the U.S."
R.W. Baird analyst David Tarantino told investors he thought Wednesday's results were "incrementally positive." And the solid beat of Wall Street forecasts helped send shares higher in after-hours trading.
During the first quarter, Starbucks said its sales in stores open at least a year, considered a key restaurant measure, rose 4 per cent for the quarter after two years of steady declines.
Part of the gain came from stronger sales of the company's single-serve instant coffee. The company also saw a 30 per cent boost in sales of its holiday drinks, like the popular eggnog latte.
Meanwhile, the number of customers visiting its stores rose 1 per cent. And the average ticket - how much customers spend during a trip- climbed 4 per cent.
Starbucks plans to open about 100 new U.S. locations during its fiscal year, along with 200 international sites. It has more than 16,000 locations around the globe.
Starbucks raised its full-year forecast, saying it now expects to earn an adjusted profit of $1.05 per share to $1.08 per share, with revenue climbing by the mid-single digit percentages. In November, it expected to report an adjusted profit of up to 96 cents per share on lesser revenue gains for fiscal 2010.
Analysts expect Starbucks to earn $1.02 per share on revenue of $10.07 billion - a 3 per cent increase.
Starbucks shares climbed in after-hours trading after the results were released, rising 71 cents, or 3.1 per cent, to $23.99. Its stock closed at $23.29 in regular trading.

Organizations: Starbucks Corp., The Associated Press

Geographic location: U.S., CHICAGO, Canada China

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