Originally published November 1, 2012 at 1:21 PM | Page modified November 1, 2012 at 9:39 PM
Although Starbucks? fourth-quarter profit was about even with last year?s, investors loved it.
The stock climbed $3.49, or 7.5 percent, in after-hours trading Thursday to $50.11 a share. That came after the Seattle coffee chain?s earnings announcement, which followed a regular stock trading session in which shares gained just 72 cents.
In part, investors rejoiced that a summer slowdown appears to have abated.
Starbucks? paltry profit gain also was not as bad as it looks.
Although the profit of $359 million, or 46?cents a share, was just 0.1 percent above last year?s fourth quarter, it did beat analysts? expectations by a penny. In addition, the 2011 and 2012 fourth quarters included one-time gains and losses, without which Starbucks? profit would have increased 24?percent.
CEO Howard Schultz said consumer spending appears to be ?bifurcated? now, and that Starbucks appeals both to high-end consumers of luxury goods and people from other walks of life.
Being popular on social-media sites such as Twitter also helps attract customers and reduce marketing spending, he said.
?The burden of proof is on companies and consumer brands to recognize there?s a seismic change in consumer behavior ... as a result of social and digital media and the emergence of mobile commerce and mobile payments,? he told analysts during a post-earnings conference call.
Starbucks? revenue for the quarter grew 11 percent to $3.4 billion, but so did the company?s expenses. It opened 415 new cafes in the quarter ended Sept. 30, compared with closing 15 stores during the same period last year.
Total operating expenses rose 9 percent to $2.9 billion.
Most of the new stores ? 250 of them ? are in Starbucks? Americas region, which includes the United States.
After years of sluggish store growth, Starbucks introduced 1,063 new cafes in fiscal 2012 and plans to open about 1,300 in fiscal 2013. About 600 of those will be in Asia.
In the past few weeks, Starbucks opened its long-awaited first stores in India. One Mumbai location is reported to have so much traffic that at times a security guard has implemented a one-customer-in, one-out policy.
The chain has not said how many stores it expects to open in India, which has a well-established cafe scene. But Schultz said on the call with analysts that he expects it eventually to become one of the company?s top five markets.
In China ? which has 1.3 billion people, compared with 1.2 billion in India ? the green mermaid wants 1,500 locations by mid-2015, making that its largest market outside the U.S. It recently passed the 700-store mark in China.
Schultz said that despite reports of an economic slowdown in China, ?Starbucks? business remains extremely strong in China as evidenced by a 52 percent year-over-year increase in sales.?
U.S. business continues to be the largest by far, with about 11,000 of the chain?s 17,000 stores and the bulk of its sales.
Revenue for the Americas segment, which is mostly U.S. business, grew 9 percent to $2.5 billion in the fourth quarter, and operating income gained 21 percent to $536.3 million.
In Asia, Starbucks? revenues rose 23 percent to $198 million for the quarter, and operating income climbed 11 percent to $65.2 million.
Starbucks? business segment in Europe, the Middle East and Africa ? weighted heavily toward Europe ? continues to suffer, with a 2 percent drop in revenue to $284 million and a $6.5 million operating loss.
Same-store sales suffered there as well, largely because of continued softness in Germany, said Michelle Gass, Starbucks? president for that region.
The biggest gain came in Starbucks? channel-development business, which includes grocery sales of whole-bean coffee and single-serve coffee and tea pods. Its revenue rocketed 32 percent to $318.5 million, and operating income rose 26 percent to $100.8? million.
For the year, Starbucks? revenue gained 14 percent to $13.3 billion, and earnings rose 11 percent to $1.4 billion, or $1.79 a share.
For fiscal 2013, the chain is targeting earnings per share of $2.06 to $2.15.
The company also said its board had approved an increase in dividend to 21 cents a share, up from 17 cents. It will be payable Nov. 30 to shareholders of record as of Nov. 15.
In other coffee news Thursday, Green Mountain Coffee Roasters said it will manufacture private-label coffee for Issaquah-based Costco Wholesale. The single-serve pods, for use in Green Mountain?s proprietary brewing system, will be available in mid-December.
Green Mountain, which bought Seattle-based Tully?s Coffee?s wholesale business and roastery in 2009, has struggled lately as its patents expire and competitors, including Starbucks, release their own single-serve coffee makers.
Material from The Associated Press is included in this report. Melissa Allison: 206-464-3312 or mallison@seattletimes.com. Twitter @AllisonSeattle.
Source: http://seattletimes.com/html/businesstechnology/2019581158_starbucksearningsxml.html?syndication=rss
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