Starbucks beats on higher sales, lifts forecast

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Associated Press

Posted on July 25, 2013 at 5:00 PM

Updated Thursday, Jul 25 at 6:01 PM

NEW YORK (AP) — Starbucks says its profit climbed 25 percent in the latest quarter as caffeine-addicted customers helped boost sales and its coffee costs eased.

The results topped Wall Street expectations, and the company raised its full-year guidance. Starbucks' shares were up almost 7 percent in aftermarket trading.

The Seattle-based chain, which has more than 19,000 locations around the world, said global sales rose 8 percent at cafes open at least 13 months, with all regions registering growth. In its flagship U.S. market, the figure rose 9 percent.

The performance is in contrast to McDonald's Corp., which reported an underwhelming 1 percent increase in U.S. locations open at least a year earlier this week. The fast-food chain had partly blamed economic conditions, saying people have been reluctant to eat out.

Troy Alstead, chief financial officer for the chain, said the results demonstrate people's loyalty to the Starbucks brand, despite factors such as bad weather or a weak economy cited by other companies for underwhelming results in the quarter.

"We have some resilience, some insulation," Alstead said.

Starbucks has been tweaking the products in its cafes to drive up sales. In April, it rolled out revamped sandwiches in new packaging that come with slightly higher prices; the new egg salad sandwich, for example, costs $5.25, up from $5.15 previously.

New salads and grain bowls were also introduced at about $7 per box.

Moving forward, the company has been testing new baked goods — acknowledging that its baked goods don't have a great reputation. It also announced that it's teaming up with Danone to offer new, branded Greek yogurt parfaits that are set to start replacing its current offerings in cafes by next year.

For the quarter, the company said it also managed to increase sales by 2 percent at established cafes in its Europe, where the company has been struggling. In the China and greater Asia region, the figure rose 9 percent.

Starbucks Corp. earned $417.8 million, or 55 cents per share, for the period ended June 30. That's up from $333.1 million, or 43 cents per share, a year ago.

Analysts on average expected 53 cents per share.

Revenue rose to $3.74 billion, more than the $3.72 billion analysts had forecast.

It now expects earnings per share in the range of $2.22 to $2.23, up from $2.12 to $2.18.

Its shares rose to $72.30, after closing up 2 percent at $68.17. Its stock is up 34 percent over the past year.

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Follow Candice Choi at www.twitter.com/candicechoi

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