September 22, 2011 / 1:15 PM / 8 years ago

Starbucks eyes growth in U.S., Europe, Russia

PARIS (Reuters) - Starbucks Corp’s (SBUX.O) chief executive expressed confidence in the future of the economies of the United States and Europe on Thursday and said the group was planning to open at least 200 new stores in its home market next year.

The world’s biggest coffee chain also wants to grow in Western Europe, notably in Germany and France, and is looking at expanding in Russia, Howard Schultz told Reuters in an interview.

“I am optimistic about America and I think it would be a mistake for people to underestimate the entrepreneurial spirit there,” he said.

“We will open up at least 200 new stores in the U.S. in 2012 and remodel 1,700 stores. That is part of our commitment to investing back in America and creating jobs,” he said.

The positive trend in Starbucks’ U.S. sales is expected to last over the coming months, he added.

Shares in Starbucks were down 1.7 percent at 1435 GMT (10:35 a.m. ET), however, as a grim outlook from the U.S. Federal Reserve and downbeat data in Europe and China heightened fears about a global recession.

Europe, meanwhile, is urgently looking for a solution to the euro zone debt crisis, Schultz said.

“We are all aware of the financial pressures on Western Europe and the anxiety that people are feeling,” Schultz said. “I feel these problems are complex but solvable and I think there is a renewed sense of urgency to solve them.”

Schultz said his teams had identified a number of countries where Starbucks did not have a large enough presence, such as Germany where, with 150 stores against 180 in Manhattan alone, the company planned to double or triple in size.

“With fewer than 65 stores, we are also dramatically understored in France,” Schultz said. Starbucks will unveil further French expansion plans “relatively soon,” he said.

The CEO said Starbucks was experiencing success in Russia where it also had plans to grow its business.

Starbucks, which generates about 20 percent of its revenue in international markets, announced a reorganization in July aimed at helping it generate half of its revenue outside the United States.

Schultz said the company would grow organically but that acquisitions were also possible.

“We are sitting on a very strong balance sheet and virtually no debt, so the future of the company I don’t think will only be organic, there could be other things,” he said.

Starbucks competes with chains such as Dunkin’ Donuts (DNKN.O) and Caribou Coffee CBOU.O, as well as to an extent McDonalds (MCD.N) and a variety of smaller players.

Asked about commodities prices, Schultz said coffee prices were currently “at a very high level” but said Starbucks was not planning to implement wide price increases.

“We want to be as sensitive as possible to the financial pressures our customers are facing,” he said.

ICE arabica coffee futures have fallen around 22 percent from a 34-year peak hit in May. A shortage of high quality beans after several below-average crops from key producer Colombia saw coffee prices almost double last year.

Starbucks charges 3.50 euros ($4.79) on average for a tall “Caffe Latte” in Europe.

The group reported better-than-expected fiscal third-quarter earnings on July 28 and said it was forecasting a 15-20 percent increase in earnings per share in 2012 as well as a 10 percent rise in revenue.

($1 = 0.730 Euros)

Additional reporting by Lionel Laurent, Nigel Hunt and Sarah McFarlane; Editing by James Regan

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