DOW JONES NEWSWIRES
Starbucks Corp.'s (SBUX) fiscal second-quarter net income fell
77%, but the company said it topped its cost-cutting target for the
quarter and began to see benefits from its turnaround efforts.
Shares were down 2.8% at $13.30 in after-hours trading. The
stock nearly doubled in the last five months but remain off more
than a quarter from last June.
"During the second quarter, we began to see signs of traction
from the cost reduction and customer-facing initiatives we've
undertaken over the past year," said Chairman and Chief Executive
Howard Schultz. "Our focus on delivering value while staying true
to the premium quality and values of the brand, is paying off."
Faced with increased competition from McDonald's Corp. (MCD) and
an economy that has people cutting back, Starbucks has been cutting
costs and closing stores. The company said with closings and
openings, the net store count will rise by 20 by the end of the
fiscal year.
In January, the company said it expected the second quarter's
bottom line to reflect $100 million in savings, a figure the
company said Wednesday it topped at $120 million.
For the quarter ended March 29, the coffee giant reported net
income of $25 million, or 3 cents a share, down from $108.7
million, or 15 cents a share, a year ago. Excluding restructuring
charges, earnings were 16 cents in the latest quarter.
Net revenue fell 7.6% to $2.33 billion, as overall same-store
sales fell 8%.
Analysts polled by Thomson Reuters were looking for per-share
earnings of 15 cents on revenue of $2.36 billion.
Starbucks said U.S. comparable-store sales fell 8%, marking the
sixth straight quarter of sales declines at the company. Traffic
fell 5%, and average transaction totals fell 3%.
International revenue dropped 12%, while U.S. revenue fell
6.8%.
The company also said it now expects to add 20 net new
stores.
Despite being ahead of schedule on the cost savings, the company
maintained its savings targets at $150 million for the third
quarter and $175 million for the fourth quarter.
-By Jay Miller, Dow Jones Newswires; 201-938-2331;
jay.miller@dowjones.com