By Lisa Baertlein
Jan 23 Starbucks Corp on Thursday
reported that sales at established stores in its U.S.-dominated
Americas region cooled more than analysts expected in its latest
quarter as consumers spent more time holiday shopping online
than at physical stores.
Nevertheless, the world's biggest coffee chain boosted its
fiscal 2014 earnings per share forecast to a range of $2.59 to
$2.67, from $2.55 to $2.65 previously, sending shares up 0.9
percent to $74.02 in after-hours trade.
Global sales at Starbucks cafes open at least 13 months were
up 5 percent, versus analysts' average estimate for a 5.9
percent rise, according to Consensus Metrix. That figure
included a 5 percent increase for the Americas region that
contributes the lion's share of Starbucks revenue. Analysts, on
average, expected a 6.4 percent rise from the region.
Last fiscal year, Starbucks' Americas region sales at
restaurants open at least 13 months were up 8 percent in the
fourth quarter and up 9 percent in the third quarter.
"It's hard to really be too critical, especially when you
compare what we've seen and what we're about to see in the
coming weeks," Edward Jones analyst Jack Russo said, referring
to the recent spate of disappointing earnings reports and profit
warnings from restaurants and retailers.
Those included McDonald's Corp, which earlier on
Thursday reported a steeper-than-expected drop in December sales
at established restaurants in the United States and put some of
the blame on frigid winter weather.
"Growth is hard to find," Russo said.
SHIFT TO ONLINE SHOPPING
Expectations had been muted ahead of the release of
Starbucks' results, in part because the Seattle company has been
on a growth tear that many analysts said could not go on
"Holiday 2013 was the first in which many traditional brick
and mortar retailers experienced in-store foot traffic give way
to online shopping in a major way," Starbucks President and
Chief Executive Howard Schultz said in a statement.
Data firm ShopperTrak last week said U.S. shopper traffic
fell 14.6 percent during the holiday season.
Starbucks' net earnings increased 25 percent to $540.7
million, or 71 cents per share, for the fiscal first quarter
ended on Dec. 29.
Excluding a litigation credit of 2 cents a share, Starbucks'
profit matched Wall Street's average estimate of 69 cents per
share, according to Thomson Reuters I/B/E/S.
There has been a growing concern among analysts that the
U.S. roll-out of pastries from La Boulange, a San Francisco-area
bakery Starbucks bought in 2012, has slowed service because
workers are taking the time to warm up baked goods.
La Boulange products are sold in half of Starbucks'
company-operated stores in the United States, which works out to
about 3,500 stores.
Chief Financial Officer Troy Alstead told Reuters that
Starbucks has added staff and revamped workers' duties to
accommodate the additional labor.
"There may be a perception that there is a slowdown, but
when we measure it, there is no change," Alstead told Reuters.
Starbucks is one of the best-performing companies in the
restaurant category and its shares have run up more than 30
percent in 12 months.