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Starbucks’ profits percolate in third quarter

Thu., July 22, 2010, midnight

Starbucks Corp.’s effort to rebuild itself is taking hold: The world’s largest coffee chain said Wednesday that its third-quarter profit rose 37 percent as more customers visited its stores and spent more when they did.

The company sharply increased its dividend but offered a 2011 profit forecast in line with forecasts. And investors, hoping for a rosier outlook, sent shares down in electronic trading after hours.

But Wednesday’s results were solid, including a 9 percent increase in the key performance measure of revenue in locations open at least a year.

For the three months that ended in late June, Starbucks earned $207.9 million, or 27 cents per share. That’s compared with $151.5 million, or 20 cents per share, a year earlier, when it was stumbling under the weight of over-expansion.

Excluding one-time items, Starbucks earned 29 cents per share, meeting the average forecast of analysts surveyed by Thomson Reuters. Its revenue climbed nearly 9 percent to $2.61 billion, topping analysts’ estimate of $2.55 billion.

In other reports Wednesday:

• EBay said its second-quarter profit climbed 26 percent. Its adjusted profit beat analyst expectations, while revenue met analyst views. Most of eBay’s growth came from its online payments business, which includes PayPal and short-term credit service Bill Me Later.

• Netflix Inc.’s second-quarter earnings blew past analyst estimates as its movie subscription service added another 1 million customers, but investors focused on a narrow miss in revenue. The company’s high-flying stock fell more than 8 percent. Netflix subscribers are picking less expensive plans.

• U.S. Bancorp’s second-quarter profit nearly quadrupled, and its CEO said the amount of bad loans should shrink in the next quarter as defaults by consumers and businesses level off.

• American Airlines is losing less money these days, but it’s still on a losing streak that’s approaching two years. Parent AMR Corp. said Wednesday it lost $10.7 million in the second quarter. That’s a big improvement from last year’s loss of $390 million. Still, American’s loss stands out against big profits reported this week at rivals Delta and United.

Tags: Starbucks

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