Starbucks profit rises, shares jump
Cost-cutting and store closings help beat estimates, sending shares up almost 10%.
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LOS ANGELES (Reuters) -- Starbucks Corp. posted much better-than-expected quarterly earnings Tuesday as the coffee chain began reaping rewards from slashing costs and closing stores, sending its shares up 9.7%.
Net income for its fiscal third-quarter ended June 28 was $151.5 million, or 20 cents per share. A year earlier, Starbucks (SBUX, Fortune 500) reported a net loss of $6.7 million, or 1 cent per share -- its first quarterly net loss as a public company.
Excluding restructuring charges, Starbucks earned 24 cents a share in the latest quarter. Results were helped by cost cuts, eliminating unproductive stores, lower tax rates and higher interest income, Edward Jones analyst Jack Russo said.
That bested analysts' average forecast of 19 cents per share, according to Reuters Estimates.
"You saw adjusted EPS rise year-over-year for the first time in six quarters," said Greg Schroeder, analyst at Wisco Research LLC, an independent research firm.
For fiscal 2010, Starbucks expects earnings per share growth of 13% to 18%, excluding restructuring charges.
Starbucks is not seeing its dominant market share dented by lower-cost rivals such as fast-food giant McDonald's Corp., (MCD, Fortune 500) Chief Financial Officer Troy Alstead told Reuters Television.
Alstead declined to say when the company's closely-watched sales at established restaurants would turn positive, adding that he expects the economy will take a long time to recover.
"We're not prepared to make that projection yet ... it's still a very, very uncertain economy. Consumers are having a difficult time, unemployment continues to rise," Alstead said.
The CFO forecast earnings for the current fourth quarter to range from 19 cents to 20 cents per share, excluding items, below Wall Street's average expectation for 21 cents per share, according to Reuters Estimates.
Russo said the forecast for the current quarter was roughly in-line with expectations.
"The guidance for next year was a little a bit above where most consensus estimates were, but not that much," Russo said.
Total revenue fell to $2.4 billion from $2.6 billion.
Starbucks global same-store sales fell 5%. Sales at restaurants open at least 13 months were down 6% in the United States and were off 2 % internationally.
Starbucks has cut jobs, attacked expenses and targeted more than 1,000 stores around the world for closure. It also has selectively lowered prices to attract and retain consumers in a lingering recession.
The shares finished down 1.5% at $14.69 on the Nasdaq in the regular trading session but jumped to $16.11 in extended trade. 
