Starbucks Profit Up 44%, Aided by Drive-Throughs

Starbucks Corp., the largest U.S. coffeehouse chain, said Wednesday that profit rose 44% in its fiscal third quarter as faster service and additional drive-through stores bolstered sales. The company raised its full-year earnings forecast.

Net income climbed to $98.1 million, or 24 cents a share, from $68.4 million, or 17 cents, a year earlier, the Seattle company said. Sales for the quarter ended June 27 rose 27% to $1.32 billion.

Starbucks has hired more staff, increased the availability of drive-through service and installed new espresso machines to shorten customer lines.

The company, which added 285 outlets worldwide in the quarter, is expanding in suburban areas with shops that serve customers in cars. Its drive-throughs are more profitable than its walk-in stores.

“The whole focus on improving productivity has been quite high and is working,” said Don Gher, who helps manage about $525 million in assets, including Starbucks shares, for Bellevue, Wash.-based Coldstream Capital Management.

Shares of Starbucks rose 74 cents to $46.38 during extended trading after the earnings report was issued. During the regular Nasdaq session it had fallen 79 cents to $45.64. Starbucks stock hit a record high of $46.57 on Monday.

The company said its operating profit margin in the quarter was 11.7%, up from 10.2% a year earlier. Sales at U.S. stores open at least 13 months rose 12%.

Starbucks, which opened its first coffee shop in 1971, had 5,784 U.S. stores at the quarter’s end, 4,081 of them company-owned. It plans to add about 1,300 stores worldwide this fiscal year and about 1,500 in 2005.

The company forecast fiscal 2005 earnings of $1.12 to $1.15 a share. Analysts had expected it to earn $1.08, according to Thomson First Call.