Starbucks Corporation (SBUX), the specialty coffee retailer, is scheduled to report its fiscal fourth quarter 2009 financial results on Thursday, November 5, 2009. In the last two quarters, the company surprised the investors by reporting higher net income compared to the consensus earnings estimates.
In the year-ago quarter, the company reported earnings of $0.01 per share and revenues of $2.52 billion. For fiscal 2010, Starbucks currently expects adjusted earnings growth in the range of 13% - 18%, excluding $0.02 - $0.03 of expected restructuring charges in the first half of fiscal year 2010, and including nearly $0.02 per share of additional earnings from the extra week in the fiscal fourth quarter, as fiscal 2010 is a 53-week year for Starbucks.
Analysts' estimates for the quarter ending September 2009 (Q4) range from a low of $0.19 to a high of $0.22, with a consensus of $0.208. Baring the same quarter in 2008, In the last eleven years, the company's Q4 revenues trended up over Q3 revenues. The trend is likely to continue.
For the fiscal quarter ending September 2009, the consensus EPS forecast has increased over the past week from $0.207 to $0.208 (0.48%) and increased over the past month from $0.206 to $0.208 (0.97%). Of the 18 analysts making quarterly forecasts, 3 raised and none lowered their forecast.
Upward revision in earnings is attributable to Starbucks' strategy of slashing prices on some of its easiest-to-make beverages and raising prices on more complicated beverages.
The company said it would match contributions to employees' retirement plans and announced a plan to take control of its 50 French locations. Starbucks and Spain's Sigla SA (Grupo Vips) each had a 50% equity stake in the operations in France, Spain and Portugal prior to the deal. Under the agreement, Starbucks took full operating control of the French business while Grupo Vips concentrates on Spain and Portugal operations.
Starbucks is dropping its year-old "Gold" loyalty program, which provided members a 10% across-the-board in-store discount. Unlike the Gold program which carried a $25 membership fee, the new "My Starbucks Rewards" program will be free when it launches on December 26. Participants will earn a "star" each time they use their Starbucks card to pay for a drink. The new program could help the company maintain some sort of loyalty program and improve margins by removing the 10%-off discounts. Moreover, it could drive more payments via Starbucks card - which are probably higher-margin payments than dealing with credit card transaction fees or processing cash.
For the fiscal year ending September 2009, the consensus EPS forecast has increased over the past week from $0.762 to $0.764 (0.26%) and increased over the past month from $0.760 to $0.764 (0.53%). Of the 21 analysts making yearly forecasts, 5 raised and none lowered their forecast.
The company's stock closed Tuesday at $19.42, compared to the 52 week range of $7.06 and $21.11. The stock seems to be trading at appropriate levels.
