Starbucks Corp. (NASDAQ: SBUX), the world's largest specialty coffee retailer, is scheduled to release fiscal third-quarter after the closing bell on Wednesday, July 21, 2010. Analysts, on average, expect the company to report earnings of 29 cents a share on revenue of $2.56 billion. In the year ago quarter, the company reported earnings of 24 cents per share on revenue of $2.40 billion.
Starbucks Corporation, together with its subsidiaries is the roaster and retailer of specialty coffee. It purchases and roasts whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian-style espresso beverages, cold blended beverages, a range of food items, a selection of premium teas, and beverage-related accessories and equipment, through Company-operated retail stores.
In the preceding second-quarter, the Seattle, Washington-based company reported that its net-income surged to $217.3 million or 28 cents per share, compared to $25.0 million or 3 cents per share in the year-ago quarter. Excluding charges, the company's non-GAAP net income for the quarter rose to $223.1 million or 29 cents per share from $121.1 million or 16 cents per share in the same quarter last year. Quarterly revenue for the quarter increased 9% to $2.53 billion from $2.33 billion in the same quarter last year.
Analysts, on average, expected the company to report earnings of 25 cents per share on revenue of $2.41 billion. The revenue increase was primarily driven by a 7% increase in comparable store sales and favorable foreign exchange GAAP operating margin for the quarter under review improved to 13.4% from 1.8% a year ago, while non-GAAP operating margin increased 540 basis points to 13.7% from 8.3% last year.
In April, the company boosted its fiscal year 2010 non-GAAP earnings guidance to a range of $1.19 to $1.22 per share from its previous range of $1.05 to $1.08 per share. Further, Starbucks said that it expects 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. It expects fiscal 2010 non-GAAP operating margins of 15% to 17% in the US segment and 8% to 10% in the international segment. For fiscal 2010, it expects cash flow from operations to be at least $1.5 billion and free cash flow to be more than $1 billion. For fiscal year 2010, Starbucks continues to target about 100 net new stores in the U.S. and about 200 net new stores in International markets. Both the U.S. and International net new additions are expected to be mainly licensed stores.
The coffee giant has resumed its expansion in international markets. Starbucks expects its international business to reach sustainable double digit profit margins beginning in its fiscal 2011.
In May, the company said that it would relaunch Seattle's Best Coffee, a brand it acquired in 2003, with a new logo and expanded franchising efforts. Starbucks will increase the distribution points for Seattle's Best more than tenfold to more than 30,000 by the end of the company's fiscal year. The coffee retailer has continued to diversify its product portfolio to fend off increased competition and attract new customers. Late in May, Starbucks announced the launch of Starbucks VIA Iced Coffee in the U.S. and Canada.
Early in July, the company began offering free AT&T Inc. (NYSE: T) wireless connections at all U.S. company-operated stores in order to increase customer traffic. Starbucks also entered into a partnership with Yahoo Inc. (NASDAQ: YHOO) to create the Starbucks Digital Network, which will offer free, unrestricted access to paid websites such as News Corp.'s (NASDAQ: NWS) WSJ.com.
In terms of stock performance, Starbucks shares have gained nearly10% percent since the beginning of the year.
Disclosure: Author doesn't own any of the stocks discussed here.
