Declaring 2010 a “year of tremendous development and progress,” Starbucks Corp. on Thursday reported a better-than-expected 86-percent increase in profits for the fourth quarter, and upgraded its outlook for 2011 based on strong full-year results.
For the fourth quarter ended Oct. 3, the Seattle-based coffeehouse giant beat analysts’ expectations with earnings of $278.9 million, or 37 cents per share, compared with $150 million, or 20 cents per share, in the final quarter last year.
Net revenue for the quarter — which included an extra week — rose 17.2 percent to $2.8 billion. Overall same-store sales climbed 8 percent, reflecting a 5-percent increase in traffic and a 2-percent increase in the average ticket. On a 13-week basis, revenue was up 8.6 percent to $2.6 billion.
Analysts were predicting earnings of 32 cents per share on revenues of $2.77 billion.
Of Starbucks’ 16,858 units worldwide at the end of the quarter, 11,131 were in the United States. Domestically, Starbucks reported that comparable-store sales rose 8 percent, based on a 6-percent increase in traffic and a 2-percent hike in the average ticket.
For the full year, Starbucks beat its own expectations with earnings of $945.6 million, or $1.24 per share, compared with $390.8 million, or 52 cents per share, in fiscal 2009. Revenues for the full year were up 9.5 percent to $10.7 billion.
Earlier this year, company officials had predicted earnings ranging between $1.22 and $1.23.
Howard Schultz, Starbucks’ chairman, president and chief executive, said the results were a “credit to the hard work and dedication of Starbucks partners around the world every day, and are particularly gratifying in light of the formidable economic challenges that our customers and we continue to confront in virtually very country and every market in which we operate.”
Beyond the financial performance, Schultz said 2010 was “a year of tremendous development and progress for Starbucks on many other fronts as well.”
Schultz said the company improved the customer experience, leveraged its “coffee authority” and differentiated from competitors, while forging connections with consumers through its loyalty program and digital and social media.
The company also increased prices on some beverages because of rising coffee prices and other commodities.
Schultz credited innovations, such as the new VIA Ready Brew instant coffee, growth of secondary brand Seattle’s Best Coffee, and new retail grocery products.
“The spirit and sense of urgency that emanated from our transformational journey over the past few years continues unabated,” Schultz said. “I am convinced that we are about to enter an era of even more opportunity for Starbucks, and am more convinced than ever that our future has never looked brighter.”
For 2011, Starbucks upgraded its outlook, saying it expects earnings to range between $1.41 and $1.47 with no restructuring charges, but higher coffee costs are expected to have an unfavorable impact on earnings of about 8 cents to 10 cents. Earlier, the company had projected earnings of $1.36 to $1.41 for the next fiscal year.
The company is targeting mid-to-high single-digit revenue increases for 2011, driven by low-to-mid single-digit sales growth.
Next year Starbucks plans to open about 500 new stores around the world, including 100 in the United States and 400 internationally, most of which will be licensed.
Contact Lisa Jennings at [email protected].
