Starbucks Swings To Profit Amid Soft Sales Growth; Stock Down

(RTTNews) - Coffee retailer Starbucks Corp (SBUX), Thursday reported a swing to profit in the fourth quarter from a loss last year, driven by a 10 percent growth in revenues, while the prior year results were hurt by litigation charges. Despite growth across key regions, revenues for the quarter fell short of Wall Street estimates.

Starbucks detailed some weak earnings outlook for the first quarter, while tightening its earnings guidance and lifting sales projection for the full year 2015.

Starbucks shares slid about 5 percent in after-hours trade on the Nasdaq, following the announcement.

Sales climbed in the quarter on the strength of existing stores as well as the addition of new ones, with growth spread across key regions, said Starbucks in a statement.

Starbucks has been adding more stores and introducing new food products to attract more consumers. During the fourth quarter, the company opened 503 new stores, ending the period with 21,366 stores globally.

Starbucks, based in Seattle, Washington, reported fourth-quarter net earnings of $587.9 million or $0.77 per share, compared with a loss of $1.23 billion or $1.64 per share last year.

Result for the prior year included a $2.8 billion litigation charge related to an arbitration with Kraft Foods.

Excluding items, adjusted earnings for the quarter were $0.74 per share, compared with $0.60 per share a year ago.

On average, 16 analysts polled by Thomson Reuters expected earnings of $0.74 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the fourth quarter rose 10.3 percent to $4.18 billion from $3.79 billion in the prior year. Eighteen analysts had a consensus sales estimate of $4.23 billion for the quarter.

Global comparable store sales were up 5 percent for the quarter, with growth spread equally across Americas, China and the Asia, and Europe, Middle East and Africa.

The company also benefited from incremental revenues from the 1,599 new stores opened over the past 12 months.

For the first quarter, Starbucks expects adjusted earnings of $0.79 to $0.81 per share. Analysts currently expect earnings of $0.83 per share for the quarter.

For fiscal 2015, Starbucks projects adjusted earnings of $3.08 to $3.13 per share, a growth of about 16 to 18 percent from a year ago. The company estimates earnings growth of 15 to 20 percent, with sales expected to grow 16 to 18 percent, up from a prior range of 10 percent.

Analysts currently expect earnings of $3.16 per share on sales growth of 11.7 percent for the year.

Starbucks said its guidance includes over $1 billion in incremental revenue from the planned acquisition of Starbucks Japan.

In September, Starbucks said it will buy the remaining 60.5 percent share of its Japanese joint venture, Starbucks Coffee Japan Ltd, for about $913.5 million. The deal is part of efforts to further elevate growth and innovation in Japan, its second-largest market when measured by retail store sales.

Starbucks declared a cash dividend of $0.32 per share, an increase of 23 percent.

Starbucks closed Thursday at $77.32, up $0.78 or 1.02%, on a volume of 5.2 million shares. In after hours, the stock dropped $3.72 or 4.81% at $73.60.