Starbucks net up 29%

by Staff
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SEATTLE — Starbucks Corp. on Wednesday announced revenues and earnings for its fiscal third quarter ended July 3.

For the 13 weeks ended July 3, net income rose 29% to $125,575,000, up from $97,580,000 in the same year-ago quarter. Earnings per share also rose 29%, to 31c from 24c.

Consolidated net revenues increased 21.4% to $1,601,799,000 from $1,318,691,000 for the same period in fiscal 2004.

"We are pleased with the strength of both U.S. and International operations — reflected in our solid third-quarter revenue results and the expansion of our operating margin during the quarter," commented Jim Donald, Starbucks president and chief executive officer. "We remain committed to building shareholder value by executing our strategy and realizing the tremendous growth opportunities available to Starbucks on a global basis.

"Our strong performance year-to-date positions us well to achieve our fiscal 2005 goals — and gives us confidence in the aggressive store growth targets we have established for fiscal 2006."

U.S. total net revenues for the quarter increased by $219 million, or 20%, to $1,339,440,000, compared with $1,120,269,000 for the corresponding period of fiscal 2004.

U.S. comparable store sales increased by 7% due to a 4% increase in the average value per transaction, including 3% attributable to a beverage price increase in October and a 3% increase in the number of customer transactions.

U.S. operating income increased by 30% to $245,070,000 for the quarter.

International total net revenues increased by $64 million, or 32%, to $262,359,000 for the quarter compared with $198,422,000 for the corresponding period of fiscal 2004.

International comparable store sales also increased 7% due to a 4% increase in the number of customer transactions coupled with a 3% increase in the average value per transaction. International operating income rose 41% to 18,992,000 for the quarter.

Starbucks has introduced targets for 2006, including opening approximately 700 company-operated locations and 600 licensed locations in the U.S. In International markets, Starbucks plans to open approximately 150 company-operated stores and 350 licensed stores.

The company is targeting total net revenue growth of approximately 20% for 2006 and expects comparable store sales growth in the range of 3% to 7%.

Excluding any impact from expensing stock options, the company is targeting earnings per share of $1.44 to $1.47 for fiscal 2006, consistent with the company’s previously stated goal for longer-term earnings per share growth in the range of 20% to 25%.

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