Starbucks 1Q profit soars

January 27, 2000: 4:55 p.m. ET

Company posts 30% earnings increase; results beat Street estimates

NEW YORK (CNNfn) - Starbucks Corp. posted a 30 percent increase in fiscal first-quarter income Thursday, as expected after the company issued an upbeat earnings forecast earlier this week.
    The Seattle-based specialty coffee retailer earned $34.7 million, or 18 cents per diluted share, on a net basis for the quarter ended Jan. 2, up from $26.7 million, or 14 cents per share, a year earlier.
    The results are adjusted to reflect a two-for-one stock split in early 1999.
    Revenue rose 30 percent to $527 million.
    The company alerted Wall Street on Tuesday that the per-share earnings results would beat the 16-cent consensus forecast of the First Call Corp. It's the first time in five years that Starbucks has beat Wall Street's quarterly forecasts.
    Starbucks on Tuesday also raised its full-year earnings estimates, to 70 cents a share from 67 cents. For the prior fiscal year, Starbucks posted net income of $101.7 million, or 54 cents a share, on a diluted basis.
    The results were released after Thursday's market close. Starbucks (SBUX) shares finished the day down 1/8 at 28-7/8 on the Nasdaq, then edged up to 29-1/2 in after-hours trading.
    The stock gained about 6 percent Tuesday in the wake of the upwardly revised earnings forecast. But shares are far off their lifetime high of 41 hit last summer.
    Starbucks shares tumbled last year after investors sold off, troubled by the company's announcement that it planned to aggressively expand on the Internet.
    The company, whose stock fell as low as 19-7/8 in wake of the news, later scaled back its Internet plans.
      Starbucks Chief Executive Howard Schultz on a telephone conference with analysts predicted that the store total would eventually exceed 20,000 worldwide.
        "We have just begun to realize how large the global growth prospects are, and we anticipate many years of significant development in existing and new markets," Schultz said. "Ultimately we believe we can surpass 20,000 stores worldwide."
        As of Jan. 2, 2,346 of Starbucks' 2,674 stores were in North America. In the future, international expansion may accelerate, though Schultz said he still saw big expansion closer to its Seattle home.
        "We believe that there's a very, very large opportunity still in front of us in North America," Schultz told Reuters by telephone.
        The company expects to have 500 stores open in both Europe and the Pacific Rim by the end of 2003, Schultz said.
        Schultz repeated that Starbucks would focus on its core business and forestall any major expansion on the Internet.
        "I want to reiterate that we have no intention of pursuing any Internet activity that would be dilutive to our per share earnings target or that would divert attention from our core retail business," Schultz said.

-Reuters news service contributed to this report.

RELATED SITES
Starbucks
Note: Pages will open in a new browser window External sites are not endorsed by CNNmoney