Starbucks Japan Records 30% Y-o-Y Net Profit Increase & Revises Full Year Forecast Upward (SBUX)

by: Steven Towns posted on: February 08, 2006 | about stocks: SBUX

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Starbucks Coffee Japan, 40% owned by Starbucks Corp. (SBUX), trading on the Osaka Stock Exchange's Hercules Market (ticker: 2712) for startups and high-growth companies, reported a 29.5% y-o-y increase in net profit in the 9-month period ended Dec. 31, 2005. Reuters-Tokyo coverage of the earnings cited strong sales of high margin products as the key reason, also leading the firm to raise its full-year outlook by 14%.

Reuters reported that its parent-only net profit totaled 1.36 billion yen or US$11.4 million for the nine-month period ended December versus 1.05 billion yen in the prior year (+29.5%). Same store sales are said to be recovering and have exceeded the prior year's levels for each of the past six months due to stronger demand for seasonal drinks and food products such as hot sandwiches. Reuters notes that these sales had shown y-o-y decreases for four consecutive years until last August. Looking at the big picture sales are also believed to be improving based on Japan's economic recovery and thus higher consumer spending.

Starbucks Japan will have a new CEO from June, Maria Mercedes M. Corrales, the former head of Levi Strauss Japan.

In Starbucks Corp.'s earnings conference call, new ready-to-drink (RTD) products, two to be exact, are said to be doing quite well exceeding expectations. Starbucks Japan is offering two flavors as part of the Discovering Starbucks Series: Seattle and Milano, in 200ml size at 210 yen (~US$1.78 at Y118/US$1).

Starbucks Japan shares traded on the Osaka Hercules Market closed up 5,000 yen (+8.62%) today at 63,000 yen (~US$534 at Y118/US$1) following yesterday's after-market earnings release. It only has 1.42 million shares outstanding, pays a 100 yen annual dividend, and has a P/E of 76.26. (Yahoo! Japan Finance News)

Starbucks Coffee Japan (2712) 1-yr chart: