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Starbucks (SBUX) Drops After Lifting 2012 Earnings View Below Street

 April 26, 2012 04:35 PM

Specialty coffee maker Starbucks Corp. (NASDAQ:SBUX) reported a 18.5% increase in second quarter earnings driven by continued strong global same store sales and an increasing contribution from its Channel Development segment. Further, the company lifted fiscal 2012 earnings guidance that was below Street's view, sending its shares down 5.04% in aftermarket.

Earnings for the second quarter were $309.9 million or $0.40 per share, up from $261.6 million or $0.34 per share last year.

Revenue grew 14.7% to $3.196 billion. Analysts had expected a profit of $0.39 per share on revenue of $3.18 billion.

[Related -Starbucks Corporation (SBUX): How Q1 Earnings Will Fare?]

Global comparable store sales increased 7%, driven by a 6% increase in traffic and a 1% rise in average ticket.

Revenue from company-operated stores increased to $2.52 billion from $2.29 billion, while revenue from licensed stores rose to $290.3 million from $237.8 million. CPG, food service and other revenue increased to $384.4 million from $254.4 million.

Revenue for the Americas segment increased 10% to $2.4 billion, primarily due to an 8% increase in comparable store sales, including a 7% increase in the number of transactions and a 1% increase in average ticket. Additionally, licensed store revenue growth of about 27% contributed to the Americas segment results.

Revenue for the EMEA segment grew 14% to $272.4 million, primarily due to incremental revenues from the consolidation of the Switzerland and Austria markets. Comparable store sales declined by 1% with slight decreases in both transactions and average ticket.

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Revenue for the China/Asia Pacific segment climbed 32% to $174.6 million, due to incremental revenues from 98 net new company-operated store openings over the last 12 months, and an 18% increase in comparable store sales.

Channel Development revenue jumped 57% to $321.5 million, primarily due to sales of Starbucks- and Tazo-branded K-Cup portion packs and the benefit of recognizing the full revenue from packaged coffee sales under the direct distribution model. March 2012 marked the one-year anniversary of the packaged coffee transition.

Starbucks opened 176 net new stores globally, including its 3,000th store in the China/Asia Pacific segment, its first store in Norway and the first Evolution Fresh store in Bellevue, Washington.

Looking ahead into the fiscal 2012, the company lifted its earnings guidance to range of $1.81 to $1.84 per share from previous forecast of $1.78 to $1.82 per share, while Street predicts $1.86 per share. This increased outlook represents 19% to 21% growth over the $1.52 EPS in fiscal 2011, excluding the 2011 non-routine gains.

The company continues to expect commodity costs will add about $230 million of cost pressure to fiscal 2012, with the majority already reflected in results from the first half of the year. Capital expenditures are now expected to be about $900 million.

EPS growth is expected to be about 25% to 29% in the second half of fiscal 2012. This represents earnings of $0.45 to $0.46 per share in third quarter, while Street predicts $0.46 per share, and in fourth quarter $0.46 to $0.48 earnings per share, reflecting the easing of commodity costs in the second half.

For the fiscal 2012, the company is now targeting revenue growth in the low teens, driven by mid-single-digit comparable store sales growth, 1,000 net new store openings, and continued strong growth in the Channel Development business.

Previously, the company has expected about 10% revenue growth for the fiscal 2012, driven by mid-single-digit same-store sales growth, 800 net new store openings, and strong growth in the CPG business.

SBUX closed Thursday's regular session up 1.95% at $60.66. The stock has been trading between $33.72 and $62.00 for the past 52 weeks.



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