Starbucks looks to international stores to fuel earnings
Starbucks Corp. is dialing back expectations for its U.S. stores in light of economic uncertainty but has a three-year plan for snazzy new drinks and future profit growth fueled by aggressive international expansion.
As expected, the company said Wednesday its fiscal second-quarter profit sank 28 percent as U.S. consumers responded to rising food and gas prices by making fewer latte runs.
The coffee purveyor slashed 30 additional store openings from its already-scaled-back plan for 2008 and said it will open fewer than 400 stores per year in 2009 through 2011.
International openings will increase at a far faster clip, though, with 975 this year and a projected 1,300 in 2011. Starbucks expects to have 21,500 stores worldwide by the end of fiscal 2011.
Starbucks' financial goals for the coming years reflect worries about a protracted U.S. economic downturn and rely on international stores particularly ones run by licensed partners rather than Starbucks itself to drive profit.
The company forecast earnings of 90 cents to $1 per share in 2009, $1.10 to $1.20 per share in 2010, and $1.35 to $1.50 in 2011, predicated on a 20 percent average rise in sales each year internationally but just 6 percent growth in the U.S.
Starbucks shares gained 3 cents to close at $16.23 Wednesday before the results were released. The shares fell 11 cents in after-hours trading.
Concurrent with its heavy focus on international growth, Starbucks is working through a series of high-profile changes meant to stabilize U.S. sales. Chairman and Chief Executive Officer Howard Schultz has already picked out new coffee brewing machines and yanked fragrant breakfast sandwiches that masked the smell of coffee.
Schultz said Wednesday that the company will launch three new types of drinks in the U.S. this summer:
- A health-conscious smoothie-style line.
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