Starbucks Backs 2011 Outlook Despite Higher Coffee Prices - Update 8/17/2010 9:48 AM ET

Starbucks Backs 2011 Outlook Despite Higher Coffee Prices - Update
8/17/2010 9:48 AM ET

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(RTTNews) - Specialty coffee retailer Starbucks Corp. (SBUX: News ) on Tuesday reaffirmed its earnings outlook for fiscal year 2011, despite the recent rise in green coffee prices.

The Seattle, Washington-based company reiterated its fiscal 2011 earnings outlook in a range of $1.36-$1.41 per share, which it provided while reporting its financial results for the third quarter in July.

The company expects to absorb about $0.04 per share in additional commodity costs in the year, primarily related to higher coffee prices. Starbucks said it will be able to offset the relatively short-term fluctuations inherent in today's coffee market.

On average, 21 analysts polled by Thomson Reuters expect the company to report earnings of $1.43 per share for fiscal 2011. Analysts' estimates typically exclude special items.

Starbucks had been grappling with weak U.S. sales growth due to slowing traffic and moderating demand amid the economic meltdown. In an effort to live through the recession, the company embarked on several cost-cutting measures, including store closures and job cuts. The company also brought back founder Howard Schultz as CEO to steer it through. In mid-July, Starbucks reported a 37% increase in third-quarter profit, helped by strong same-store sales growth and improved margins. The company's profit for the third quarter was $207.9 million or $0.27 per share, compared to $151.5 million or $0.20 per share for the year-ago quarter. Net revenues for the quarter rose 8.7% to $2.61 billion from $2.40 billion in the prior-year quarter.

At that time, the company said it expects fiscal 2010 non-GAAP earnings in a range of $1.22-$1.23 per share. Analysts expect the company to report earnings of $1.24 per share for the year.

Earlier on Tuesday, Starbucks announced the launch of Starbucks Reserve, a new line of ultra-premium, single-origin coffees, which will be available in select U.S. stores this fall. Beginning August 31, the first offering, Galápagos San Cristóbal will be available for sale.

In Tuesday's regular trading session, SBUX is trading at $24.03, up $0.21 or 0.88% on a volume of 13,178 shares. The stock has been trading in a range of $18.21-$28.50 in the past 52 weeks.

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