Earnings Preview: Starbucks to report 1Q Thursday

Earnings Preview: Starbucks to report first-quarter Thursday

Associated Press

NEW YORK (AP) -- Starbucks Corp.'s first-quarter results Thursday should give investors a sense of how the coffee giant's increasingly diversified offerings are perking up profits.

WHAT TO WATCH FOR: The Seattle company is looking beyond its ubiquitous cafes for growth. In early March, Starbucks announced plans to sell a single-cup coffee machine that lets people brew lattes and other drinks at home. It also announced plans in March to open its first Evolution Fresh Inc. juice store.

Starbucks announced a new energy drink line, called "Refreshers," with green coffee extract at its annual meeting a few weeks later. The 12-ounce drinks will be sold in its cafes and by other by the end of the month.

WHY IT MATTERS: CEO Howard Schultz has said that Starbucks' packaged-goods business could one day rival its cafe business. In the previous quarter, the company said revenue from its consumer products business — which includes Via instant coffee and Starbuck ice cream — increased 72 percent.

As for single-serve coffee market, Starbuck's Verismo is part of a three-pronged strategy: Via Ready Brew is intended for those who don't want to buy a coffee machine; K-cups are for those who want a basic brewed coffee and Verismo will be for more complex coffee drinks.

The push into the single-serve market comes amid growing competition in the U.S. from fast food chains like McDonald's Corp. and Burger King , which have begun selling specialty coffee drinks.

Starbucks is also looking overseas for growth, particularly in Asia. By 2014, China will become Starbuck's second largest market outside of the U.S., with 1,500 stores. Japan will have 1,000 stores by next year and Starbucks plans to more than double its size in South Korea, with more than 700 stores there by 2016.

WHAT'S EXPECTED: Analysts on average expect a profit of 39 cents per share, according to Fact Set.

LAST YEAR'S QUARTER: The company posted net income of 34 cents per share on revenue of $2.79 billion.

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