AP News

Starbucks shares get a jolt from Q4 results


NEW YORK (AP) — Starbucks' stock got a big jolt Friday a day after the coffee chain raised its profit forecast for its current fiscal year and said it will accelerate cafe openings. It cited a pipeline of new products and the strength of its core business.

THE SPARK: After the market closed Thursday, the Seattle-based company said global sales at restaurants open at least a year rose 6 percent during its fiscal fourth quarter. Starbucks said the growth was driven primarily by an uptick in customer traffic. The figure is a key metric because it strips out the impact of newly closed and opened locations. In the U.S., Starbucks said the figure rose by 7 percent.

THE BIG PICTURE: The increase in the sales figure was a surprise for some analysts because Starbucks executives had noted a slowdown in customer traffic this summer, citing the challenging global economy. On Thursday, CEO Howard Schultz said Starbucks has the ability to weather economic cycles because people of all walks of life consider it an "affordable luxury."

Schultz also noted that Starbucks took several measures to boost sales when executives noticed the slowing traffic in June and July. In addition to a promotion on the deal site Living Social, Starbucks decided to go ahead with its "treat receipt" promotion, which offers customers a discounted drink if they bring their receipts back in the afternoon. The company had considered discontinuing the promotion this year.

It also noted that new drinks made with green tea extract, called "Refreshers," helped drive sales. Looking forward, the company is betting that other new offerings — including an improved line of baked goods and a single-serve coffee machine — will drive growth.

During its fiscal 2013, the company plans to open 1,300 new stores, up from the 1,063 it opened in the fiscal year that just ended. It also lifted its profit forecast for fiscal 2013 to a range of $2.06 to $2.15 per share from $2.04 to $2.14 per share, and its dividend was hiked 4 cents, or 24 percent, to 21 cents.

SHARE ACTION: Starbucks shares were up 11 percent, or $5.13, at $51.75 in afternoon trading.


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