Starbucks profit climbs as US sales increase

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News,Business,Food and Drink

NEW YORK (AP) — Starbucks reported a stronger quarterly profit on Thursday as customers in the U.S. continued shelling out more money at its cafes.

The Seattle-based chain said global sales at established locations rose 6 percent for its second fiscal quarter, including in the U.S., where it has more than 11,000 cafes. Operating margin also improved as a result of lower costs for ingredients, and the company raised its profit outlook for the year.

Chief Operating Officer Troy Alstead said in a phone interview that the domestic sales increase was the result of an uptick in customer visits, as well as people spending more on average when they visited.

He noted that Starbucks delivered the stronger sales despite the severe weather, which has been cited by companies including Dunkin' Brands and McDonald's Corp. for weak sales.

Alstead stressed the popularity of Starbucks' new La Boulange bakery items that have been rolling out in recent months. He downplayed a recent hiccup with the rollout when the company decided to offer its pumpkin and lemon loaves again after customers complained.

"Oh, tweaks are always happening," Alstead explained of new product introductions.

After seeing through the rollout of the baked goods, Alstead said Starbucks will move on to boosting lunch options. He said the company is already testing some items.

Starbucks Corp. keeps finding ways to attract customers or getting them to spend more. The measures have included price hikes, getting people to sign up for its loyalty program to boost visits and the rollout of new breakfast sandwiches and bottled juices.

During the first three months of the year, sales at established locations also rose 6 percent in the unit encompassing Europe, the Middle East and Africa, where Starbucks has struggled to compete against local cafes in recent years. In Asia, the figure rose 7 percent.

For the quarter, the company earned $427 million, or 56 cents per share, which was in line with Wall Street expectations. A year ago, it earned $390.4 million, or 51 cents per share.

Revenue rose to $3.87 billion, but was short of the $3.96 billion analysts expected.

The company stood by its outlook for comparable sales to be up mid-single digits for the year. It now expects to earn between $2.62 and $2.68 per share, from its previous guidance of $2.59 and $2.67 per share.

Its stock rose $1.10 to $72.19 in after-market trading.

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