Starbucks full of beans again as same-store US sales rise

COFFEE shop giant Starbucks yesterday exceeded analysts' expectations in its quarterly update, a sign that consumers are beginning to spend more on small, daily "luxuries".

It also posted its first quarterly rise in US "same-store" sales – outlets open at least 12 months – for the first time in two years. The figures for the quarter ended 27 December led the company to raise its 2010 earnings forecast.

The chain's latest financial report showed a return to growth in the company's crucial US market.

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Sales at restaurants open 12 months or more rose 4 per cent during the fiscal first quarter, boosted by the company's new Via instant coffee, holiday drinks and select price increases.

The last time Starbucks posted a gain in US same-store sales was the fiscal fourth quarter ended September 2007.

Starbucks chief financial officer Troy Alstead said the improvement in sales was both broad-based and sustainable.

But the company said it is aware of the "profound economic uncertainties".

Starbucks executives expect 2010 same-store sales growth to be modestly positive as high unemployment and lingering problems with mortgages persist.

The Seattle-based chain, which has slashed costs and closed more than 900 outlets in a restructuring, saw its net income more than triple to $241.5 million (148.9m) in the quarter to 27 December. Its total net revenue rose 4.1 per cent to $2.7 billion.

The company is now focusing on sharpening operations in its international business and the division that sells prepared foods such as bagged coffee, ice cream, Via and bottled drinks.

Sharon Zackfia, analyst with William Blair & Co, said: "The biggest surprise was how much they raised guidance this early in the year."