Starbucks earnings rise 20% in second quarter

by Keith Nunes
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SEATTLE — A 6% increase in customer traffic combined with a 1% increase in average purchase helped propel Starbucks Corp.’s net income 20% higher during the second quarter of fiscal 2011. Net income for the quarter ended April 3 was $261.1 million, equal to 34c per share on the common stock, up from $217.3 million, or 28c per share, in the same period a year ago.

Sales for the quarter were $2,785.7 million, up 10% from $2,534.7 million during the previous year.

“The underlying health of our business has never been better and our fiscal second-quarter results continue to demonstrate this strength,” said Troy Alstead, chief financial officer. “Customer traffic grew in both our U.S. and International segments and we continue to see improved profitability throughout the retail store business as operational improvements combined with revenue growth drive strong sales leverage.

“Our results for the quarter were even more significant when viewed in the context of the investments we made during the period and the charges related to Seattle’s Best Coffee store closures in Borders bookstores. We remain well positioned to deliver on our previously communicated fiscal 2011 outlook of 15% to 20% e.p.s. growth compared to last year’s results despite dramatically higher commodity costs.”

Starbucks’ net income rose 32.5% to $608.1 million, or 79c per share, during the first half of fiscal 2011. In the first half of fiscal 2010, the company’s net income was $458.8 million, or 60c per share.

Sales for the first half of the year were $4,744.8 million, up 7% from the first half of fiscal 2010.

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