NEW YORK (CNN/Money) -
Starbucks Corp., the world's largest coffee chain, on Wednesday reported second-quarter earnings that surged 53 percent from a year ago on the back of strong sales in both its U.S. and international operations.
For the fiscal second quarter, the Seattle-based company posted a profit of $79 million, or 19 cents a share, compared to last year's $53 million, or 13 cents a share. Analysts had forecast a profit of 17 cents a share, according to First Call.
Starbucks said consolidated sales jumped 30 percent to $1.2 billion from $954 million a year ago. U.S. comparable sales -- or sales at stores open at least a year -- grew 13 percent in the quarter.
Starbucks (SBUX: Research, Estimates) also upped its full-year earnings forecast by 4 cents per share to 90 or 91 cents a share and said it expects full-year fiscal 2004 revenue growth in the range of 25 percent to 30 percent.
"Clearly Starbucks has proven it is a recession-resistant company. Now as the economy picks up, it's charging ahead. I won't be surprised if Starbucks increases its guidance again this year, especially as it stays on track for phenomenal growth," said Doug Christopher, analyst with Crowell, Weedon & Co.
The company said it is targeting 20 percent revenue growth and between 20 to 25 percent EPS growth over the next three to four years.
"During the second quarter, all areas of our business, from our retail operations both domestically and internationally, to our specialty businesses delivered strong financial performance," Starbucks CEO Orin Smith said in a statement. "Additionally, innovation was prevalent throughout the company and we believe recently announced initiatives combined with our core retail business provide a powerful platform for future growth."
Most recently, Starbucks in March debuted its first in-store CD-burning service that offers its customers the chance to burn full-length albums and personalized compilations from a digital library.
"As the first company in the United States to offer a CD-burning service in a retail environment, we believe this endeavor will enhance how people discover music and enhance the coffeehouse experience," Smith told analysts in a conference call. "We expect to expand this service to 10 stores in Seattle this spring."
Charging forward
Starbucks plans to open 1,300 new stores globally in 2004, or about three new stores a day. The company currently operates more than 7,500 retail locations in North America, South America, Europe and the Middle East.
Starbucks chairman Howard Schultz told CNN/Money that the company is still in the "very early stages" of store growth both in the U.S. and internationally.
"We think we're on track to become one of the most recognizable brands in the world," said Schultz. "We're in 35 markets already. There are some new markets that we're very interested in, such as Russia and Eastern Europe. India is another unique place to be in but it's not going to happen tomorrow. But at the same time, we're more focused on filling in the markets we're already in."
Product innovation and evolution is another area of focus, said Schultz. For example, as part of its summer 2004 promotion, the company plans to launch three new coffee flavors -- including chocolate, vanilla and strawberry-flavored Frappuccino drinks -- and two new food products.
"We are always testing and creating new products. We're now the largest footprint of Wi-Fi access in the world. We're constantly looking for new ways to reinvent ourselves, and we're not about embracing the status quo," said Schultz.
He added, "We also think there's a big opportunity in food for us, but we won't become a restaurant. You won't find a kitchen in a Starbucks because that's not our core competency. But we are testing a few other ideas that will continue to make Starbucks a unique experience for the 30 million customers who visit our stores every week."
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