Starbucks Plans More Stores

The 29% earnings increase boosted Starbucks' income to $126 million from $98 million for the same period in fiscal 2004. Earnings per share rose 29% too, reaching 31 cents compared with 24 cents in the same quarter last year. Comparable store sales growth totaled 7% for the quarter, with the figure attributed to a 4% increase in the average value per transaction and a 3% percent increase in the number of customer transactions.

Jim Donald, Starbucks president and CEO, commented that the company sees "tremendous growth opportunities available to Starbucks on a global basis" that generate confidence that the chain will be able to continue expanding as planned. The company plans to open approximately 1,500 new stores on a global basis in this fiscal year, including approximately 550 company-operated locations and 525 licensed locations. In International markets, Starbucks plans to open approximately 100 company-operated stores and 325 licensed stores this year.

For fiscal 2006, the 1,800 new stores that the company plans to open on a global basis represents an acceleration in the pace of growth. In the US, Starbucks plans to open approximately 700 company-operated locations and 600 licensed locations. In International markets, Starbucks plans to open approximately 150 company-operated stores and 350 licensed stores.

The chain reported that although the ratio of its store operating expenses to retail sales decreased to 40.2% for the quarter from 40.4% for the corresponding period last year, the decrease was partially offset by higher payroll expenses. Payroll increased because, "In order to facilitate ongoing, accelerated retail store growth, the company has been increasing the number of assistant store managers and opening a higher number of drive-thru locations over the past year," Starbucks said.