Starbucks Corporation (NASDAQ:SBUX) Robust Q1 Results Offset by Looming Commodity Pressure

Starbucks Corporation (NASDAQ:SBUX) went down by 0.12% and closed at $33.03
after the company said that higher commodity costs may have an unfavorable
impact on profit this year. Share of the Seattle-based coffee giant lost 4 cents
after opening at $32.32 and trading in the range of $32.05-$33.45 with volume of
16.47 million shares, above the daily average of 6.39 million shares. The market
capitalization of the stock stands at $24.48 billion with P/E of 26.69. The
stock has 52 week range of $21.26-$33.78. After the market closes on Wednesday,
the company reported its first fiscal quarter results and said that it earned
$346.6 million, or 45 cents per share, up 43.5% year over year from $241.5
million, or 32 cents per share, earned in the same quarter last year.
Analysts' on an average were expecting to post EPS of 39 cents a share. The
upside was driven by impressive 8% same-store sales growth in the U.S., which
surpassed the Street Account consensus of 5.6%. Revenue rose nearly 8% to $3
billion during the quarter beating the street consensus of $2.93 billion.
Company-operated retail sales increased 6.9% to $2.45 billion on comps 7%;
Specialty revenue was up 16.2% to $500 million, including Licensing revenue of
$379 million plus Foodservice and Other sales of $121 million. Total revenue
growth by segment included +7.5% for the U.S., +8.7% for International, +12.0%
for the Global Consumer Products Group (CPG), and +32.7% for the Other Segment.
Consolidated operating margin increased 340 basis points, to a record 17.0%, on
sales leverage and operational improvements. Domestic operating margin rose 410
basis points, to a record 21.9%, while international operating margin increased
720 basis points, to a record 16.3%, marking the third straight quarter of
double-digit operating margins. Operating margin in the global consumer products
division declined 210 basis points, to 34.6%, on higher coffee costs. For Fiscal
2011, the company expects EPS of $1.44 to $1.47, reflecting 15% to 20% growth
over fiscal 2010 non-GAAP EPS on a 52-week basis. No restructuring charges are
anticipated in fiscal 2011. The company also expects EPS for fiscal Q2 and Q3 to
be in the range of $0.32 to $0.33 in each period, and EPS in fiscal Q4 is
expected to be approximately $0.35 to $0.36. The Company said that Coffee prices
are locked through the remainder of 2011.  Commodity inflation will negatively
impact earnings by $0.20 this year, with $0.17 of the anticipated pressure
impacting the remaining three quarters. Starbucks Corporation (Starbucks) is the
roaster and retailer of specialty coffee in the world, operating in more than 50
countries. Starbucks purchases and roasts whole bean coffees and sells them,
along with handcrafted coffee and tea beverages and a variety of fresh food
items, through Company-operated retail stores.