AP
Starbucks Profit Rises 35 Percent
Thursday November 15, 5:40 pm ET
By Elizabeth M. Gillespie, AP Business Writer
Starbucks Profit Rises 35 Percent Despite Drop in U.S. Traffic


SEATTLE (AP) -- Starbucks Corp. said Thursday its fiscal fourth-quarter profit jumped 35 percent, despite a slowdown in store openings and a drop in U.S. traffic.
Shares plummeted in after-hours trading.

For the 13 weeks ended Sept. 30, the world's largest chain of coffee houses posted net earnings of $158.5 million, or 21 cents a share, compared with $117.3 million, or 15 cents a share for the same period last year.

Quarterly revenue was $2.44 billion, up from $2 billion last year.

Analysts surveyed by Thomson Financial were projecting 21 cents a share on $2.43 billion in revenue.

Same-store sales, a key measure of a retailer's health, increased 4 percent, toward the low end of the company's guidance.

In the United States, sales at stores open at least 13 months rose on a 5 percent increase in transaction value, which partially offset a 1 percent drop in traffic -- the first decrease since the company started releasing those numbers three years ago.

Business in overseas stores was healthier, with traffic rising 5 percent and average transaction value increasing 1 percent.

Starbucks shares closed down 15 cents at $24.10, then tumbled another $2.15 in extending trading. The stock has fallen more than 40 percent over the past year amid rising dairy costs, increased competition and economic woes that appear to have forced customers to pare back on fancy drinks.

Starbucks opened 615 stores in the latest quarter and 2,571 in fiscal 2007, boosting its worldwide store count to 15,011. In fourth-quarter 2006, the company opened 656 stores.

For the full fiscal year, Starbucks earned $672.6 million, or 87 cents a share, compared with $564.3 million, or 71 cents a share in fiscal 2006. Revenue in fiscal 2007 was $9.4 billion, compared with $7.8 billion last year.

The company had targeted earnings per share of 87 cents to 89 cents for the year, though it warned it would be difficult to meet the upper end of that range because of rising dairy costs and soft growth in U.S. business.