Wednesday, April 27, 2011

Starbucks Corp. (NASDAQ: SBUX): Q2 Earnings Preview 2011

Starbucks Corp. (NASDAQ: SBUX), the world's largest specialty coffee retailer, is scheduled to release fiscal second-quarter earnings after the closing bell on Wednesday, April 27, 2011. Analysts, on average, expect the company to report earnings of 34 cents a share on revenue of $2.73 billion. In the year ago quarter, the company reported earnings of 29 cents per share on revenue of $2.53 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 first-quarter, the Seattle, Washington-based company's net income was $346.6 million, or 45 cents per share, compared to $241.5 million, or 32 cents per share, in the prior year quarter. Revenue increased8% to $3.0 billion from $2.7 billion in the same quarter last year.  Analysts, on average, expected the company to report earnings of 39 cents a share on revenue of $2.93 billion. 

At its last earnings call in January, the company expects earnings for the second quarter and the third quarter to be in the range of 32 cents to 33 cents per share in each period, while earnings in the fourth quarter is expected to be about 35 cents per share. The company also tightened its fiscal 2011 outlook. For fiscal year 2011, the company expects earnings of $1.43 to $1.47 per share, compared to its prior estimate of $1.41 to $1.47 per share. Starbucks said it continues to target mid-to-high single-digit revenue growth based on a 52-week comparable year, driven by low-to-mid single-digit comparable store sales growth. Consolidated operating margin improvement is still expected to be about 50 to 100 basis points over last year. The company also reaffirmed its capital spending of about $550 million to $600 million for the full year 2011.

Starbucks is seeking to bolster sales at supermarkets, expand its Seattle’s Best brand, and open new international stores as part of a push to become a global consumer products giant.

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. 

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, Starbucks entered a strategic relationship with smaller rival Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) to expand its presence in the new and fast-growing U.S. single-serve coffee market, which is currently dominated by Green Mountain's Keurig brewer with a 80 percent market share.

The company's stock currently trades at a forward P/E  (fye Oct 3, 2012) of 20.48 and PEG ratio (5 yr expected) of 1.43. In terms of stock performance, Starbucks shares have gained nearly 35 percent over the past year.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire