Starbucks Corporation (SBUX) reported first quarter results with earnings of 33 cents per share. Earnings were 5 cents above the Zacks Consensus Estimate of 28 cents per share, and were up 120% compared to 15 cents in the prior-year quarter. The strong results were driven by continued innovation and implementation of efficient cost structure.
Net revenues for the quarter increased 4.1% year-over-year to $2.7 billion, primarily due to a 4% increase in comparable stores sales and the positive impact of foreign currency translation related to the weakening of the U.S. dollar, most notably against the Canadian dollar, which was partially offset by a smaller store base and a decline in specialty revenues.
Segment-wise, U.S. segment revenues increased marginally by 1.1% to $1.93 billion due to a 4% increase in comparable store sales, partially offset by the closure of 369 underperforming company-operated stores over the last 12 months.
Net revenues in the International segment grew 19.2% year-over-year to $591 million mainly due to the impact of a weaker U.S. dollar relative primarily to the Canadian dollar, the effect of consolidating the previous joint venture operations in France and 4% increase in comparable-store sales.
Global Consumer Products Group segment reported a net sales decline of 4.4% to $196.8 million due to lower licensing revenues in the packaged coffee business and lower foodservice revenues, driven by ongoing softness in the hospitality industry.
Based on the strong first quarter results, management updated guidance for fiscal 2010. The company is now expecting mid-single digit revenue growth, driven by modestly positive comparable store sales growth and approximately 300 planned net new stores.
Starbucks targets to open approximately 100 net new stores in the U.S. and approximately 200 net new stores in International markets. These new stores both in the U.S. and International markets are expected to be primarily licensed stores.
The company now expects full-year 2010 non-GAAP earnings to be in the range of $1.05 to $1.08 per share. Capital expenditures are expected to be at approximately $500 million for the full year.
Cash flow from operations is expected to be approximately $1.5 billion and free cash flow is expected at approximately $1 billion.
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