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Sat, Jul 26, 2003 - Page 12 News List

Starbucks quarterly profits rise by 23% due to new drinks

BLOOMBERG

Starbucks Corp, the largest US coffee-shop chain, said third-quarter profit climbed 23 percent as new stores, prepaid gift cards and products such as malt-flavored drinks bolstered sales.

Net income increased to US$68.4 million, or US$0.17 a share, from US$55.7 million, or US$0.14, a year earlier, the company said. Revenue in the period ended June 29 rose 24 percent to US$1 billion.

Starbucks added 283 coffee shops in the quarter, bringing its total to 6,741 licensed and company-operated stores. The company had also been adding specialty drinks and features such as WiFi access and gift cards to keep customers returning, helping to increase sales 8 percent at shops open at least 13 months.

"People are willing to give up a lot of things, but it doesn't look like Starbucks," said Reed Bender, a money manager at Robert Bender & Associates, owner of about 350,000 Starbucks shares.

Shares of Starbucks fell US$0.89 to US$25.50 on electronic exchanges after the close of NASDAQ Stock Market trading. The stock had dropped US$0.45 earlier. It had risen 29 percent this year.

Profit was US$0.01 more than the average forecast of analysts surveyed by Thomson Financial.

Starbucks expects to earn US$0.67 a share in this fiscal year and US$0.83 to US$0.85 the following year. The company was forecast to earn US$0.67 this year and US$0.81 next year, according to Thomson.

The company forecast same-store sales growth will be at or above the high end of its 3 percent to 7 percent range for the remainder of the fiscal year and 3 percent to 7 percent higher next year.

Starbucks plans to open about 1,300 new stores on a global basis in the next fiscal year, up from about 1,200 stores in fiscal 2003.

The company expects to open about 575 company-operated locations and 375 licensed locations in North America in the next fiscal year.

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