Starbucks' 1Q profits soar on strong sales, traffic

SEATTLE — Starbucks Corp.’s fiscal first-quarter earnings soared 82 percent as the coffee chain attracted more customers who snapped up an expanded offerings of food and drinks over the holidays.

Starbucks has enjoyed healthy sales growth, but is seeking to keep its momentum going by expanding on a number of fronts.

To persuade more customers to get something to eat with their drinks, the company has been introducing new and revamped baked goods, sandwiches and salads and wants to become more of a destination for grabbing a quick lunch.

In the evenings, it plans to offer beer and wine in a quarter of its U.S. stores over the next five years. The idea is to drive up sales throughout the day, not just during the morning rush when people are getting their caffeine fixes.

Another way it’s driving sales is through its mobile app and loyalty program, which help get customers in the habit of visiting Starbucks rather than its competitors.

As it seeks to transform itself, Starbucks is undergoing a major change at the top. It announced earlier this month that its chief operating officer, Troy Alstead, plans to take an “extended unpaid leave” after 23 years with the company. It said it was personal decision by Alstead, who wanted to spend more time with his family.

Starbucks said it earned $983.1 million in the quarter ended Dec. 28, or $1.30 per share. That compared with $540.7 million or 71 cents per share, a year earlier.

On a per-share basis, Starbucks said it had profit of $1.30. Earnings, adjusted for non-recurring gains, were 80 cents per share.

The results met Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was also for earnings of 80 cents per share.

The coffee chain posted revenue of $4.8 billion in the period, beating Street forecasts. Analysts expected $4.79 billion, according to Zacks.

Revenue at its stores open at least a year rose 5 percent. Customer traffic was up 2 percent in the quarter, compared with 1 percent in the previous period.

For the current quarter ending in March, Starbucks expects its per-share earnings to range from 64 cents to 65 cents. The company expects full-year earnings in the range of $3.09 to $3.13 per share.

Shares of Starbucks rose nearly 4 percent, or $2.99 in after-hours trading when the report was released. During regular trading, shares rose nearly 2 percent, or $1.45 to $82.74.

BY ANNE D’INNOCENZIO, AP Retail Writer