BCE's Starbucks Watch

Starbucks Earnings Soar

LOS ANGELES, Feb 01, 2006 (Dow Jones Commodities News via Comtex) --

By Russ Britt

Coffeehouse behemoth Starbucks Corp. said Wednesday that first-quarter earnings jumped 20% during the first quarter amid 10% growth in same-store sales for January, and the company raised its outlook for fiscal 2006.

After the close, Starbucks said net income was $174.2 million, or 22 cents a share, for the quarter ended Jan. 1, compared with $144.7 million, or 17 cents a share, for the same period a year ago. Sales at the Seattle-based firm rose 22%, to $1.93 billion vs. last year's $1.59 billion.

The company's earnings were hit by a 2-cent charge due to changes in stock-option accounting. Analysts polled by Thomson First Call, predicted, on average, the company would earn 20 cents a share. Sales were in line with First Call estimates.

Starbucks shares ended trading Wednesday down 1.1%. In after-hours trading, Starbucks stock jumped 5% to $33.

The company added that same-store sales during January rose 10%. Same-store sales, a key measure for retail financial health, compare revenue at outlets open more than a year. The company was expected to report 7% sales growth during the month, according to Thomson First Call.

Starbucks said in a press release that it was raising its forecast for fiscal 2006 earnings to 68 cents to 70 cents a share, up 5 cents from its own earlier prediction. The First Call prediction had been for earnings of 66 cents a share.

The company said that its 10% growth for January likely is not sustainable throughout the year, and said 3% to 7% growth is expected throughout 2006.