Starbucks's (SBUX) fiscal fourth-quarter profit surged 86% as the largest U.S. coffee-shop operator boosted same-store sales from a combination of more customer visits and more spending per customer. The company also benefited from an extra week in the quarter compared to a year ago.
Net income for the quarter, which ended Oct. 3, was $278.9 million, or 37 cents a share, up from $150 million, or 20 cents, a year earlier, as same-store sales increased 8%, the company said Thursday. Revenue jumped 17% to $2.84 billion. Factoring out the extra week, sales increased 9%.
Starbucks grew its foot traffic -- or the number of customer visits -- by 8% from a year ago and grew the average amount that customers spend on each visit by 2%. That growth helped the company offset the cost of a 50% jump in Arabica coffee prices over the past nine months. "Starbucks today is firing on all cylinders," CEO Howard Schultz said during a conference call with analysts Thursday afternoon.
The company augmented in-store sales with more revenue from packaged coffee. Starbucks' Global Consumer Products Group, which got a boost from the launch of Starbucks's Via instant coffee about a year ago, increased its fourth-quarter sales by 19% from a year earlier -- or by 10% when proceeds from the extra week are excluded -- to $201.3 million. The introduction of Starbucks Reserve premium coffee, which retails for $25 per pound, at 700 stores further helped to grow fourth-quarter sales.
Overseas activity also drove the growth. The company increased its overseas fourth-quarter revenue by 21%, or 12% without the extra week. Same-store sales growth in China was "fantastic," Schultz said, adding that the company is in discussions with potential partners to open stores in India. Starbucks added 200 stores outside of the U.S. during the past year, bringing its global total to about 16,600 stores. It plans to open some 100 stores in the U.S. and 400 stores overseas in the next fiscal year and continue to ramp up store openings in 2012, CFO Troy Halstead said.
Of course, opening all those stores will require some capital. Starbucks increased its 2011 capital-spending forecast by about 10% to between $550 million and $600 million. Aside from the new stores, Starbucks plans to remodel about 1,000 stores next year -- about the same number as it remodeled in the past year.
Starbucks also said Thursday that it is ending its packaged-coffee distribution agreement with Kraft Foods (KFT), but didn't disclose further details other than to say that it had informed Kraft about a month ago.
For the full fiscal year, Starbucks more than doubled its profit to $948.3 million from $391.5 million, as revenue increased 9.5% to $10.7 billion.