Wednesday, January 26, 2011

Starbucks Corp. (NASDAQ: SBUX): Q1 Earnings Preview 2011

Starbucks Corp. (NASDAQ: SBUX), the world's largest specialty coffee retailer, is scheduled to release fiscal first-quarter after the closing bell on Wednesday, January 26, 2011. Analysts, on average, expect the company to report earnings of 39 cents a share on revenue of $2.93 billion. In the year ago quarter, the company reported earnings of 33 cents per share on revenue of $2.72 billion. 

Starbucks Corporation, together with its subsidiaries is the roaster and retailer of specialty coffee. It purchases and roasts whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a range of food items, a selection of premium teas, and beverage-related accessories and equipment, through Company-operated retail stores.

In the preceding fourth-quarter, the Seattle, Washington-based company's net-income was$278.9 million, or 37 cents per share, from $150 million, or 20 cents per share, in the year-earlier quarter.  Revenue increased 17.2% to $2.8 billion from $2.42 billion. Analysts, on average, expected the company to report earnings of 32 cents per share on revenue of $2.77 billion. 

At its last earnings call in October, the company lifted its fiscal year 2011 outlook to a range of $1.41 to $1.47 per share from the previous forecast range of $1.36 to $1.41 per share. 

The coffee giant has resumed its expansion in international markets. Starbucks expects its international business to reach sustainable double digit profit margins beginning in its fiscal 2011. In December, the company outlined its multi-channel growth strategy that highlighted initiatives to increase sales through multiple brands and channels as well as increase its focus on large emerging markets such as China and India. The company set a target to open 1,500 stores in China by 2015. Also, the company recently signed a nonbinding memorandum of understanding with Tata Coffee, which has supplied premium coffee beans to Starbucks. Early in Janury, Starbucks changed the logo on its coffee cups, dropping the words “Starbucks” and “coffee.” The move partly reflects the company’s push to be a worldwide consumer-products giant as it enters new countries.

Starbucks plans to initiate about 500 net new stores globally in fiscal 2011; approximately 100 in the U.S. and approximately 400 internationally, the majority of which are expected to be licensed stores. The company assumes capital spending to be approximately $500 million-$600 million in fiscal 2011.

During the quarter in review, the company doubled its share-buyback authorization, citing a strong balance sheet and operating cash flow. In November, the company said it added 10 million shares to the 10.1 million remaining on its authorization at the end of its fiscal 2010 ended October 3. 

In terms of stock performance, Starbucks shares have gained nearly 40 percent over the past year.

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