Starbucks: Growth ahead, costs a concern

Staff Writer
A Heard on the Call report following a 29% profit increase in 4Q

Starbucks Corp. said it would accelerate growth in 2012, not only with new units but also with the extension of several product lines, which the company called “billion dollar businesses,” that were launched in 2011.

After reporting a 29-percent increase in fourth-quarter profit on Thursday, Starbucks chief executive Howard Schultz thumbed his nose at observers he called cynics who once predicted a destructive effect at Starbucks resulting from efforts by McDonald’s and Dunkin’ Donuts in the premium coffee space.

That, Schultz said, “has proven to be not only not the case, but I think the more money that’s been spent against the category has helped Starbucks create awareness, new customers and obviously distance between them and us.”

“We’ve never been stronger or better positioned for sustained profitable growth,” he said Thursday afternoon during the company’s conference call with investors.

In the United States, same-store sales rose 10 percent at corporate locations, and Schultz credited menu additions like the Bistro Box line and Petites that have added incremental sales and boosted business during the traditionally slower daypart of between 11 a.m. to 3 p.m.

“Starbucks is increasingly recognized by consumers as an excellent option for a healthy lunch,” Troy Alstead, Starbucks chief financial officer, said.

New products planned for the holidays and into next year – including more Bistro Box offerings – are also expected to help drive sales. Sales this season of the pumpkin spice latte are up 44 percent compared with last year, the company noted.