Starbucks toasts profits rise

Starbucks matched Wall Street's expectations with its quarterly profits after the world's largest coffee chain enjoyed a strong performance in the US despite the sluggish economic backdrop.

The company, which recently faced controversy over the level of tax it pays in the UK, said it had booked net profits of around $390m in the three months to the end of March, up from around $310m in the same period last year. Profits rose as the company's global same-store sales rose by 6 per cent, in line with what Wall Street analysts had predicted. In particular, despite the challenging consumer environment in the US, the company said same-store sales in its home country had climbed by 7 per cent. Sales in Asia were also strong, as the company looks to expand its presence in China, a key market with a growing middle-class.

Buoyed by the performance during the quarter, the company raised its earnings guidance for the year to $2.18 per share from $2.12 previously. “Continued strength in our US operations, despite ongoing uncertainty in the macro environment, has fuelled our performance,” the company's finance chief, Troy Alstead, said.

Starbucks chairman and chief executive Howard Schultz added: “Starbucks record operating performance in [the quarter] continues to demonstrate the underlying strength and resilience of our expanding global business.”

The update comes as Starbucks expands not just geographically but also into new areas. Last year, it bought the tea chain Teavana in a $620m deal and spent $100m on Bay Bread, a San Francisco-based bakery business. It has also been pushing its Verismo coffee and espresso brewer, which began selling in its US stores in late 2012.