Starbucks Deserves a Pumpkin Spice Latte After a 34 Percent Profit Jump

Starbucks Corp. (NASDAQ:SBUX) released its fiscal fourth quarter earnings after the bell Wednesday, leading to an after hours stock decline that followed a day of rises. The coffee chain finished in New York up 1.52 percent at $80.83, but fell 2.51 percent to $78.70 as of 5:00 p.m.

For the quarter that ended September 29, 2013, Starbucks reported earnings of $481.1 million, or 63 cents per share, beating analysts’ expectations of $0.60 per share. That reflects a year-over-year jump of 34.01 percent from 2012′s fourth quarter, when the coffee chain reported earnings of $359 million, or 46 cents per share. Starbucks’ net revenue also rose 13 percent to $3.8 billion after totaling $3.36 billion a year ago, but still was just shy of expectations of $3.81 billion.

 

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Other important figures to pull out of Starbucks’s report include its comparable store sales figures and global growth. The Seattle, Washington-based company is working to expand its network and product lineup, and as it adds more beverage and food items to its menu while also catering to important markets like China, investors are looking to see the appropriate growth indications.

Starbucks reported that its global comparable store sales grew 7 percent in the fiscal fourth quarter, and that was driven by a 5-percent increase in traffic. Similar to the U.S.’s 8-percent comp sales growth, same store sales in China were also up 8 percent, but that was below analysts’ expectations for a 9.1-percent gain.

For the 2013 fiscal year as a whole, net revenue was up 12 percent to $14.9 billion, and global comp sales rose 7 percent. Upon releasing the earnings, CEO Howard Shultz said in a press release, “The fourth quarter of fiscal 2013 capped off by far the best year in Starbucks’s 42-year-history.”

Starbucks now expects a fiscal-2014 revenue growth of 10 percent, which is a notably conservative estimate compared to its earlier forecast of an increase between 10 and 13 percent. This modest expectation led the chain’s stock price to fall after hours, but the CEO still exuded confidence in his conference call following the report, reportedly satisfied with Starbucks’s fourth-quarter performance.

It was an especially significant fiscal year in 2013 for Starbucks because the world’s largest coffee chain has been working to expand its traditional coffee business and adopt more packaged products and food into its retail stores. Starbucks not only continues to market its Evolution line of products that it acquired back in 2011, but it also is now working with Danone SA to sell Greek yogurt offerings and other similar items.

In addition to its new line of ventures that include the acquisition of Teavana and the Refreshers energy drink line, Starbucks is also now focusing on growth in new markets, especially China, as the country represents Starbucks’s largest market after the U.S. The company’s 8 percent same-store sales growth in its China and Asia-Pacific businesses was not as strong as many investors hoped, but sales in the Americas grew above expectations, and for now Schultz seems satisfied with his progress.

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