By Tess Stynes
Starbucks Corp. said revenue rose 10% in the fiscal fourth
quarter, thanks to a steady increase in new stores and its
continuing efforts to woo a growing crowd of coffee
aficionados.
But the coffee chain gave a weaker-than-expected outlook for its
current quarter, which includes the holiday season, and its
recently started new year.
The company on Thursday also said delivery is in the offing. In
the second half of next year, customers in certain markets will be
able to use the mobile ordering and payment app to have food and
drinks delivered.
"Imagine the ability to create a standing order of Starbucks
delivered hot to your desk daily," Starbucks Chief Executive Howard
Schultz told investors on Thursday's earnings call. "That's our
version of e-commerce on steroids."
Starbucks recently unveiled efforts to attract consumers seeking
more upscale brews. It introduced a new line of single-origin
coffees for those customers interested in where their coffee is
grown. The Seattle-based coffeehouse chain also plans to open 100
specialty Starbucks stores selling only its small-batch Reserve
brand coffees.
It raised prices earlier this year on some packaged coffee and
in-store beverages in response to a jump in coffee costs, but that
hasn't appeared to hurt sales.
Sales at company-owned stores open at least 13 months rose 5% in
the September quarter. By region, sales rose 5% in the Americas,
China and the Asia, and Europe, Middle East and Africa as well.
Starbucks has been diversifying in recent years from its
traditional coffee business by adding more packaged products and
food and has expanded rapidly. It opened 503 net new stores
globally, ending the September quarter with 21,366 stores across 65
countries.
Overall, Starbucks reported a profit for the period ended Sept.
28 of $587.9 million, or 77 cents a share, compared with a loss of
$1.23 billion, or $1.64 a share, in the year-earlier period when
the company notched a $2.8 billion litigation charge tied to a
dispute with Kraft Foods.
Late last year an arbitrator handed Starbucks a defeat in its
three-year fight with Kraft, saying the coffee giant must pay
nearly $2.8 billion for ending a failed partnership.
The dispute centered on an agreement Starbucks entered with
Kraft in 1998 to distribute and market Starbucks brand coffee in
U.S. grocery stores--and, later, in overseas markets.
Excluding special items, earnings rose to 74 cents a share from
60 cents, in line with the company's expectation of 73 cents to 75
cents a share.
Revenue increased to $4.18 billion, missing the estimate of
$4.23 billion from analysts polled by Thomson Reuters. Wall Street
was disappointed, having hoped for faster revenue growth. Starbucks
shares fell 4% in after-hours trading.
For the quarter ending in December, Starbucks forecast per-share
earnings of 79 cents to 81 cents, below the 83 cents expected on
Wall Street.
Meanwhile, For the year, Starbucks raised its revenue guidance,
partly tied to its plan to take full ownership of its Japanese
operations, guiding for to 16% to 18% growth, versus its previous
call for at least a 10% increase.
As for the bottom line, Starbucks narrowed its outlook,
projecting earnings of $3.08 to $3.13 a share, an increase of 16%
to 18%. The company had previously guided for 15% to 20% growth.
Analysts, though, projected $3.16 a share.
Julie Jargon contributed to this article.
Write to Tess Stynes at tess.stynes@wsj.com
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