Earnings Preview: Starbucks

Starbucks Corporation (SBUX) is expected to report Q4 earnings after market close Monday, Nov. 10,  with a conference call scheduled for 5:00 pm ET.

Guidance

Analysts are looking for a profit of 13c on revenue of $2.58B. The consensus range is 10c to 17c for EPS, and revenue of $2.54B to $2.62B, according to First Call. In July, the company forecast FY08 EPS in the mid-70c range vs. First Call consensus of 75c on revenue growth of approximately 11%. At the same time, the company forecast FY09 EPS 90c to $1.00 vs. First Call consensus of 87c.

Analyst Views

Despite recent initiatives to create more value for consumers such as prepaid cards and a "surprise and delight" program, the Street still has relatively low expectations for the coffee retailer.

At October's 2008 Leadership Conference, CEO Howard Schultz said that while the downturn in consumer confidence continued in Q4, the company did see a "slight improvement" in the first weeks of Q2 which may suggest Starbucks may have "hit bottom in terms of negative transactions" in Q4. While the company expected Q4 same-store sales relatively stable with Q3 trends, Starbucks did experience deterioration in Q4; Schultz said October SSS improved slightly over Q4.

Oppenheimer predicts that Starbucks will be able to increase its EPS 20% or more over the next several years as the company's bottom line benefits from store closings and lower commodity costs.

On November 6, the company announced that Troy Alstead, senior VP of Global Finance, will succeed current CFO Pete Bocian at the end of the month.