Starbucks today released its fiscal third quarter earnings for 2006, highlighting a higher net profit and more stores opening despite a slow down in store sales.
The Seattle-based company reported a 16 percent increase in quarterly profit to $145 million from $125.5 million a year ago. Its earnings rose a third to $0.18 per share this year. The revenue for the firm was up 23 percent to $1.96 billion from $1.6 billion last year. The firm also planned to open 2,400 stores worldwide including for the first time in Russia and India.
Record third-quarter store openings helped drive robust revenue growth ... we are confident in our growth potential and our ability to execute on that growth potential, commented Jim Donald, Starbucks president and CEO.
Despite the good report, the firm announced that it reached 4 percent growth in its comparable store sales for July. In the last four years growth has dropped below 7 percent only four times. McDonalds also reported comparable same store sales growth of 4.2 percent for the same month. Some had questioned whether this was a signal of a slow down in the economy as people cut back on discretionary spending.
Yesterday, Donald blamed some of its slow sales growth on unexpected high demand for its Frappuccino frozen blended beverages, which its baristas were slow at making compared to hot espressos.
â€œWhile this is an issue, and we're working on it, and we're going to get it solved, it perhaps doesn't quite deserve the focus it's been getting from analystsâ€, said Chief Financial Officer Michael Casey in a conference call.
Donald said the company was working to solve the problem by having more baristas work the morning peak hours, among other possible changes, including reducing the time it takes to blend cold drinks.