Starbucks Corporation (SBUX), the leading roaster and retailer of specialty coffee, registered robust results for the first quarter of fiscal 2011. Quarterly earnings of 45 cents a share were ahead of the Zacks Consensus Estimate of 39 cents by almost 16% and increased 40.6% from 32 cents delivered in the prior-year quarter. Profits were primarily driven by strong holiday season sales.
For the second quarter of fiscal 2011, the company expects earnings of 32 cents, for the third quarter earnings are expected at 33 cents. For the fourth quarter of fiscal 2011, earnings are expected to be in the range of 35 cents to 36 cents.
For the full year 2011, earnings were $1.28 a share reflecting a 60% increase versus $0.80 earned in fiscal 2009.
Total sales for the first quarter jumped 8.4% to $2.95 billion in the quarter compared with $2.7 billion in the prior-year quarter, portraying same-store sales growth of 7%. Same-store sales benefited from traffic and average ticket growth of 5% and 2%, respectively. Revenues were up versus the Zacks Consensus Estimate of $2.93 billion.
For fiscal 2011, Starbucks expects revenues to grow in the mid to high single-digit range, driven by low to mid single-digit comparable same store sales growth.
Operating margin for the quarter expanded 405 basis points (bps) to 17.0% compared with the prior-year quarter, reflecting sales leverage and operational competence.
Operating margin for fiscal 2011 is expected to increase by 50 bps to 100 bps.
Segment Details
U.S. segment: Net revenue in the segment rose 7% to $2,067.7 million compared with first-quarter 2010, attributed to a 8% growth in same-store sales. Same-store sales were driven by a 6% rise in traffic and a 2% jump in average tickets.
Adjusted operating margin in the U.S. segment jumped to 21.9% from 17.4% in the prior-year period, reflecting robust same-store sales and ongoing supply chain efficiencies.
International segment: Net revenue surged 9% year over year to $640 million in the quarter, reflecting a 5% growth in same-store sales. The increase consisted of a 2% rise in traffic and a 2% hike in tickets.
Operating margin at the International segment surged 900 bps to 16.3% in the quarter, portraying sales leverage on occupancy costs and effective supply chain management.
Global Consumer Products Group (“CPG”) segment: Net revenue rose 12% to $195.2 million in the quarter compared with $174.3 million in the prior-year period.
Operating margin at the CPG segment slipped 200 bps to 34.6% in the quarter compared with 36.6% in the prior-year period, primarily due to higher coffee costs.
Store Expansion Plan
Starbucks exited the quarter with 151 net new stores. The company assumes capital spending to be approximately $550 million−$600 million in fiscal 2011.
STARBUCKS CORP (SBUX): Free Stock Analysis Report
Zacks Investment Research
