PORTLAND, Ore. (AP) — Starbucks Corp. brewed up a strong second quarter but warned investors that rising costs for fuel and dairy are a bigger problem than it anticipated for the year.
The coffee giant's shares fell in after-hours trading Wednesday on the news.
Starbucks said its net income jumped 20 percent to $261.6 million, or 34 cents per share, for the quarter. That's up from $217.3 million, or 28 cents per share, earned in the same quarter last year.
Revenue rose nearly 10 percent to $2.79 billion, as it took over its consumer products business and more customers visited its stores.
The results met analyst's profit expectations and beat their $2.73 billion revenue estimate, according to FactSet.
Starbucks had a notable quarter as it expanded its single-cup coffee business, sold its ready-to-drink products in more places and took its packaged coffee business in-house after ending a distribution agreement with Kraft Foods Inc.
The company's revenue rose in the U.S. by 6 percent, internationally by 15 percent and in global consumer products by 30 percent.
CEO Howard Schultz said on a conference call with investors Wednesday that the results are particularly gratifying, given the "formidable economic and operating headwinds that continue to confront global businesses."
Starbucks said the underlying health of its business has never been better, and strong sales, customer traffic and satisfaction trends during the period led it to raise its full-year forecast
The company now expects to earn $1.46 to $1.48 per share for the year, up from $1.44 to $1.47 per share. But that's just short of Wall Street's average forecast for $1.49 per share.
Investors weren't pleased with the outlook and sent shares down 64 cents to $36.55 in after-hours trading. They had risen 59 cents, or 1.6 percent, to end regular trading at $37.19.
Starbucks said commodity cost increases are bigger than previously anticipated and will cut its earnings for the year by 22 cents, rather than the 20 cents per share it estimated in January. Starbucks is one of many food and beverage companies coping with higher costs for fuel, dairy, coffee and other goods.
Starbucks leaders said commodity price increases show no sign of abating soon, but they remained confident in the company's future.
"Our business has remained resilient in the face of these pressures, maintaining the momentum of the last two years and cementing a solid foundation from which to profitably grow," said Troy Alstead, chief financial officer for Starbucks.