Starbucks, the world's largest coffee-shop chain, is projected to report stronger fiscal first-quarter profit as sales of new offerings have offset higher costs for coffee beans.
Starbucks, which will report earnings Thursday after the markets close, is expected to have a profit of 48 cents per share, up 6.7 percent from a year ago when it reported earnings of 45 cents per share, according to analysts surveyed by Thomson Reuters.
Revenue is projected to be $3.29 billion, 11.5 percent above the year earlier $2.95 billion.
D.A. Davidson & Co. analyst Bart Glenn forecasts an eight percent comparable-store sales growth for U.S. stores and five percent international growth.
BMO Capital Markets analyst Phillip Juhan said he expects strong comparable-store sales in the October through December period, but earnings will be handicapped by more expensive coffee beans.
One of the main drivers of Starbucks' strong comparable store sales is being able to capture a greater share of traffic than it had in the past, Juhan said, pointing to the importance of offering new products.
Starbucks has been rolling out new products frequently to lure non-coffee drinkers and boost sales during the slower hours of the day.
In November, for example, Starbucks acquired juice maker Evolution Fresh Inc. for $30 million to broaden its market beyond coffee. The San Bernardino, Calif.-based Evolution is a regional brand that sells organic and fresh-squeezed juices at grocery stores, and Starbucks plan to roll it out nationally.
The company said Tuesday it's also planning to sell beer and wine at 25 selected retail stores during happy hour.
Shares of Starbucks were up 14 cents to $47.79 in late afternoon trading.