Starbucks warns coffee commodity prices to climb but expects to be able to absorb costs
By APTuesday, August 17, 2010
Starbucks backs outlook even as bean prices spike
NEW YORK — Starbucks Corp. is backing its profit guidance for next year even as it deals with higher coffee prices, saying it will be able to absorb the costs.
The Seattle-based coffee chain said Tuesday that despite spikes in the market, it will be able to offset the “short-term fluctuations.”
R.W. Baird analyst David E. Tarantino said Starbucks likely issued the update because coffee prices have risen more than 40 percent in the past year.
“For many years Starbucks has diversified its coffee procurement into multiple coffee growing regions,” the world’s largest coffee company said in a statement. “We remain confident in our ability to manage this dynamic effectively.”
Starbucks put the effect of the price hikes in the commodities market at 4 cents per share. But the company said it still expects to earn $1.36 to $1.41 per share for its 2011 fiscal year.
On average, analysts have forecast earnings of $1.23 per share for the year ending in September.
Starbucks stock climbed 55 cents, or 2.3 percent, to $24.37 in midday trading Tuesday.
