Jim Donald, Starbucks president and CEO, said that the companyis determined to continue its expansion despite "the difficultoperating environment of rising expenses." He pointed out that thecompany has achieved its growth objectives this year whileoperating in what is already a challenging environment.

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Donald cited the 668 new Starbucks store openings in the thirdquarter ended July 1, a record for a third quarter for the company,and said that the chain is on track to meet its goal of 2,400 newstores for this year. Despite the challenging conditions mentionedby Donald, a recurring refrain these days from retailers, Starbucksboosted its earnings per share to 21 cents versus 18 cents in thethird quarter last year, with total net income of $158 millionversus $145 million in last year's third quarter. Comparable storesales grew 4% as revenues climbed 20% to $2.4 billion for thequarter.

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Donald pointed out that international operations are playing abigger role at Starbucks with the revenue from the internationalsegment rising 28% during the latest quarter to reach $432million.

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In addition to forecasting 2,600 new stores next year, Starbucksis projecting comparable store sales growth in the range of 3% to7%, with total net revenue expected to grow approximately 18%.Starbucks operates about 14,400 locations.

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