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Starbucks lifts profit by 18pc
Starbucks lifts profit by 18pc

Starbucks perked up its net income by 18 per cent in its fiscal second quarter, as more customers visited its cafes in most parts of the world. The coffee giant also raised its forecast for the year on the better-than-expected results.

The Seattle-based company's stock nevertheless slid 5 per cent in after-market trading as sales showed weakness in parts of Europe.

Starbucks said global revenue at cafes open at least a year had increased by 7 per cent in the quarter, as a result of more customers and higher spending per visit. The figure is a key metric because it excludes the impact of newly opened or closed stores.

The gains were strongest in China and the Asia-Pacific, where the figure rose 18 per cent. The region is a critical expansion area for Starbucks.

Revenue at cafes open at least a year rose 8 per cent in the Americas but slipped 1 per cent in the region encompassing Europe, Middle East, Russia and Africa.

Chief financial officer Troy Alstead said the dip was largely the result of select regions of Europe that were hard hit by economic turmoil. He said the company was "not immune" from high unemployment and fragile consumer confidence in the region.

"It's not unlike what we experienced in the US a few years ago," he noted.

In a conference call with investors, CEO Howard Schultz expressed confidence that the measures would prove successful.

"I will tell you unequivocally that we will turn the European business around in the same way we turned the US business around," Schultz said.

Still, he added that the situation is "very, very tough" and varies greatly by region.

For the three months ended April 1, the company said it earned $US309.9 million ($A299.9 million), or 40 cents per share. That's compared with a profit of $US261.6 million, or 34 cents per share, in the year-ago quarter.

Revenue for the latest quarter rose to $US3.2 billion, up from $US2.79 billion a year ago. Analysts on averaged expected a profit of 39 cents per share on revenue of $US3.18 billion, according to FactSet.

Also contributing to the profit jump was the company's expanding mix of consumer products, such as its ice-cream and Tazo-branded K-Cup portion packs. Revenue from that division rose to $US321.5 million, up 57 per cent from a year ago.

For the full year, Starbucks now expects earnings per share to be in the range of $US1.81 and $US1.84. Analysts were expecting earnings of $1.86 per share.

The company expects the increase to be driven by a mix of increased revenue at cafes, new store openings and gains in the packaged goods that it sells in supermarkets and other retailers.

Starbucks, which has more than 17,000 cafes around the world, said it will open about 1000 new stores globally in the coming year. However, no growth in store numbers is planned for the Europe, Middle East, Russia and Africa region.