Continuing to gain traffic momentum worldwide, Starbucks Corp. reported Thursday a 34-percent increase in third-quarter net income despite increased commodity costs.
The Seattle-based coffeehouse chain also upgraded its outlook for the year, saying that efforts to enhance the store experience have resonated with customers and driven traffic, mitigating the impact of higher commodity costs, including coffee.
For the third quarter ended July 3, Starbucks reported net income of $279.1 million, or 36 cents per share, compared with $207.9 million, or 27 cents per share, in the same quarter a year ago.
The results exceeded analyst expectations of 34 cents per share, according to surveys by Bloomberg.
Revenue rose 12 percent to $2.9 billion, as global same-store sales increased 8 percent. The same-store sales surge reflected a 6-percent increase in traffic and a 2-percent increase in average ticket, the company reported.
“These results demonstrate the power, and the extraordinary global potential, of our unique new business model,” said Howard Schultz, Starbucks chair, president and chief executive. “Starbucks has never been healthier, more connected to our customers and partners, or better positioned to go after the tremendous business opportunities that lie ahead.”
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For the chain’s 10,957 U.S. units, Starbucks reported that net revenue rose 9 percent to $2 billion. Domestic same-store sales increased 8 percent as a result of a 6-percent increase in transactions and 2-percent increase in average check.
International net revenue totaled $658.5 million, a 20-percent increase over the same quarter last year, in part because of favorable foreign exchange rates. International same-store sales increased 5 percent on a 4-percent increase in transactions and a 1-percent jump in average ticket.
Also on Thursday, Starbucks announced that it has acquired full ownership of units in Switzerland and Austria, adding company-operated locations to its European portfolio.
Starbucks also said it has completed the previously announced acquisition of retail operations in central, southern and western China, which were previously operated in a joint venture with Maxim’s Caterers Ltd.
Starbucks’ consumer products group, or CPG, recorded a 25-percent increase in revenue to $218.4 million in the third quarter, with the company for the first time recognizing the full revenue from packaged coffee and tea after its breakup earlier this year with former licensing partner Kraft Foods.
Updating its outlook for the year, Starbucks now expects same-store sales growth at the high end of the 3-percent to 7-percent range projected earlier.
Earnings per share are projected to total between $1.50 and $1.51, a modest increase above earlier estimates of between $1.46 and $1.48.
The company expects to open a total of 600 locations this year, with about 500 internationally and 100 in the U.S. Earlier this month, however, the company lost 248 Seattle’s Best Coffee outlets that closed recently as a result of the Borders bookstore bankruptcy.
Next year, the company expects to accelerate growth with 800 new stores globally, including about 200 in the U.S., approximately half of which will be licensed locations. Internationally, Starbucks expects to open 600 locations next year, of which about two-thirds will be licensed.
Of the international total, about a quarter of the new stores will be in China, which is targeted to become Starbucks’ largest market outside the U.S. The company has pledged to open as many as 1,500 locations in mainland China by 2015.
With the additional store growth and expected strong sales from consumer retail goods, Starbucks is projecting same-store sales growth in the mid-single digits and revenue growth of about 10 percent in fiscal year 2012.
Higher coffee costs next year, however, are expected to have about a 21-cent per share impact on earnings.
At the end of the third quarter, Starbucks had 10,957 locations in the U.S., 6,691 of which are company operated and the rest licensed. Internationally, Starbucks ended the quarter with 6,061 locations, 2,218 of which are company owned.