Starbucks: Reports Record Second Quarter Earnings

Seattle / WA. (sc) Starbucks Corporation reported financial results for its fiscal second quarter ended March 28, 2010 and updated FY 2010 targets. Fiscal Second Quarter 2010 Highlights:

• Consolidated net revenues increased nine percent to 2,5 billion USD
• Comparable store sales increased seven percent, driven by a three percent increase in traffic and a four percent increase in average ticket
  • U.S. comparable store sales increased seven percent, driven by a three percent increase in traffic and a five percent increase in average ticket
  • International comparable store sales increased seven percent, driven by a six percent increase in traffic and a one percent increase in average ticket
• Consolidated operating margin improved to 13,4 percent, from 1,8 percent in Q2/2009; Non-GAAP operating margin increased 540 basis points to 13,7 percent
  • U.S. operating margin significantly improved to 17,7 percent from 4,2 percent in Q2/2009; U.S. Non-GAAP operating margin increased to 17,8 percent from 10,4 percent in the prior-year period
  • International operating margin improved to 7,7 percent, from 1,4 percent in Q2/2009; International Non-GAAP operating margin increased to 8,9 percent from 4,8 percent in the prior-year period
• EPS increased to 0,28 USD compared to 0,03 in Q2/2009; Non-GAAP EPS was 0,29 USD, compared to 0,16 USD in Q2/2009

«Starbucks second quarter results demonstrate the impact of innovation and the success of our efforts to dramatically transform our business over the last two years», said Howard Schultz, chairman, president and CEO. «Much credit goes to our partners all around the world who continue to deliver an improved experience to our customers. In addition, new products, the opening of exciting new stores in Asia, Europe and the U.S., and expanded distribution outside our retail stores all represent opportunities for future growth as we fulfill our pledge to bring the highest quality coffee to our customers», said Schulz.

«Strong revenue growth, driven by significant improvement in comparable store sales growth, combined with continued financial discipline, enabled Starbucks to achieve record results in the quarter», commented Troy Alstead, executive vice president and CFO. «We are pleased with the strong improvement in traffic in our U.S. stores, and consistent, sequential traffic growth in our International business. Our efforts to drive financial discipline and rigor throughout our decision making have led to a healthier business model, positioning the company for sustainable, profitable growth going forward. As a result of Starbucks strong year-to-date performance, we are increasing our non-GAAP EPS outlook for fiscal year 2010 to a range of 1,19 USD to 1,22 USD, including approximately 0,04 USD from a 53rd week this fiscal year».

Fiscal 2010 Targets

Starbucks has updated its fiscal 2010 financial and operational targets as follows:

• The company is now targeting mid-single-digit revenue growth over the comparable 52-week period, and high-single-digit revenue growth with the inclusion of a 53rd week, driven by mid-single-digit comparable store sales growth.
• Starbucks continues to target approximately 100 net new stores in the U.S. and approximately 200 net new stores in International markets. Both the U.S. and International net new additions are expected to be primarily licensed stores.
• Driven by the strong performance in the first half of the fiscal year, the company´s outlook on operating margins has improved. Starbucks is now targeting full-year non-GAAP operating margin (excluding restructuring charges) of 15 percent to 17 percent for the U.S. segment, and eight to ten percent for the International segment. The company continues to expect CPG segment margin of approximately 35 percent for fiscal 2010. The cumulative result of these expected margins is that consolidated non-GAAP operating margin will be in the range of twelve to 13 percent.
• The company now expects non-GAAP EPS in the range of 1,19 USD to 1,22 USD, excluding approximately 0,03 USD of expected restructuring charges and including approximately 0,04 USD from the extra week in the fiscal fourth quarter, as fiscal 2010 is a 53-week year for Starbucks.
• Capital expenditures are expected to be approximately 500 million USD for the full year.
• Starbucks now expects cash flow from operations to be at least 1,5 billion USD, and free cash flow of more than one billion USD.

Info: The complete press release is available here on Starbucks´ server.