Earnings Preview: Starbucks

Starbucks Corp. (SBUX) is expected to report Q2 earnings after the market close on Wednesday, April 27 with a conference call scheduled for 5 pm ET.

Guidance

Analysts are looking for a profit of 34c on revenue of $2.73B. The consensus range is 31c-35c for EPS, and revenue of $2..64B-$2.8B, according to First Call. In January, Starbucks guided Q2 EPS 32c-33c and FY11 EPS $1.43-$1.47 vs. consensus $1.49. The company said it would target FY11 EPS growth 15%-20% and revenue growth in the mid-to-high single digits on same-store sales growth in the low-to-mid single digits. Starbucks is seeing higher costs for certain ingredients and oil, and announced price increases on packaged coffee sold in supermarkets by up to 12% in response to higher coffee bean costs. Last month, Starbucks forecast a charge in Q2 related to the company's business with Borders (BGP) as well as the Japan tragedies. During the quarter, Starbucks and Green Mountain (GMCR) announced a non-exclusive strategic relationship for the manufacturing, marketing, distribution and sale of Starbucks and Tazo tea branded K-Cup portion packs for use in GMCR’s Keurig Single-Cup brewing system. Analysts and investors will listen for comments on the relationship with Green Mountain, as well as its partnership with Courtesy Products, and possible challenges from Kraft's (KFT) Gevalia coffee, which is slated to go head-to-head with Starbucks beginning in August.