Starbucks Profits Soar By 29% During Fourth-Quarter

It was a good fiscal Q4 for Starbucks Corp. with the beverage retailer posting a 29% increase in overall profits.

In it’s report the company says U.S. based Starbucks locations customers were spending more money per visit and were trafficking Starbucks locations on a more regular basis which helped same-store sales increase by 10%.

Starbucks cites their new loyalty program as a large part of their success, the program allows customers to load money onto a Starbucks card and use it as a debit card. According to Starbucks the card is now used one out of every four purchases.

After the company announced their increases earnings Starbucks shares were up in after-hours trading by 3.1% to $42.67.

Speaking about the rising costs of coffee and a down economy Chief Financial Officer Troy Alstead told the Wall Street Journal:

“We have been able to offset most of the commodities costs problem, not with pricing, but with a more efficient cost structure and strong traffic growth, which has given us a lot of leverage on our bottom line.”

The company is expected to see higher costs in 2012 and Alstead says if needed he believes the company can raise prices without hurting sales.

For the just-started fiscal year, the company forecasts earnings of $1.75 to $1.82 a share, while analysts polled by Thomson Reuters are looking for $1.82. It reaffirmed its revenue-growth view.

In the fourth quarter Starbucks posted earnings of $358.5 million, or 47 cents a share, up from $278.9 million, or 37 cents a share during the same quarter year-over-year.

Do you think Starbucks can raise prices and still maintain solid sales?

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