Starbucks profit rises on stronger sales
The Seattle-based coffee chain posted a slightly higher-than-expect profit for its fiscal third quarter, as sales rose in regions around the world. In its flagship U.S. market, sales at established cafes increased 7 percent. Earlier in the day, Dunkin' Donuts had reported a disappointing increase of just 1.8 percent, with executives citing intensifying competition in the breakfast category.
Troy Alstead, chief financial officer for Starbucks, said in a phone interview that an uptick in food purchases contributed to the chain's higher sales in the U.S. In particular, Alstead noted that sales of breakfast sandwiches are up 40 percent from a year ago. Starbucks has also been rolling out new baked goods in its cafes. Additionally, the company benefited from price hikes during the period.
Starbucks, like Dunkin' Donuts, is trying to convince customers to buy more food items when they come in for a drink. The push has included the introduction of new salad boxes, as well as grilled cheese sandwiches. But competition in the fast-food industry is intensifying, with everyone trying to expand into different areas to boost sales.
Globally, Starbucks said sales at established locations rose 6 percent for the quarter. That also included a 7 percent increase in the Asia region. The unit encompassing Europe, the Middle East and Africa saw a 3 percent increase.
The company raised its guidance for the year, saying it now expects to earn $2.70 to $2.72 per share. It previously said it expects to earn $2.62 to $2.68 per share.
For its fiscal 2015, Starbucks said it expects global comparable sales to increase in the "mid-single digits." Earnings per share for 2015 are expected to grow 15 to 20 percent from its core earnings for fiscal 2014.
For the quarter, Starbucks Corp. earned $512.6 million, or 67 cents per share, a penny more than analysts expected.
A year ago, it earned $417.8 million, or 55 cents per share.
Revenue rose to $4.15 billion, above the $4.14 billion Wall Street expected, according to FactSet.
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