Starbucks Corp. looks to keep momentum going, releases 1st-quarter results Wednesday

Earnings Preview: Starbucks Corp.

CHICAGO — Starbucks Corp. reports results for its fiscal first quarter on Wednesday afternoon. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The world’s largest coffee chain, Starbucks has been working to fix its business. Last year, the company cut costs, laid off workers and reinvented much of the food sold in its shops. It shut roughly 800 locations and tweaked prices for some drinks.

That helped it begin its new year heading in a new direction. After ending last fiscal year with a quarterly profit increase, Starbucks said it expects sales to rise for the new fiscal year as a whole. In the fall, it predicted sales in stores open at least a year, considered a key restaurant measure, also will rise after two years of declines. The company plans to open about 300 new locations, about one-third in the United States, in 2010.

During its fiscal first quarter, the Seattle company announced that it would begin selling its Seattle’s Best coffee at 9,000 Subway locations, more than doubling the number of locations where the drinks are served.

Starbucks said Subway will add the brew to more locations next year. It’s already sold at 6,000 locations and at supermarkets nationwide.

Meanwhile, Starbucks named John Culver president of its international unit. Culver will oversee operations and business development for all markets outside the U.S.

The company also revamped its rewards program, replacing the dual Starbucks Card Rewards and Starbucks Gold cards with My Starbucks Rewards.

BY THE NUMBERS: Analysts polled by Thomson Reuters predict a profit of 27 cents per share on revenue of $2.58 billion for the quarter. During the same period last year, Starbucks earned $64.3 million, or 9 cents per share on revenue of $2.62 billion.

ANALYST TAKE: Morgan Stanley analyst John Glass told investors he believes the first-quarter results will be the coffee house’s strongest of the fiscal year.

He said the chain could see the first gain in sales at stores open more than a year that it has in at least eight quarters; the figure is considered a key measure because it excludes sales at stores that open or close during the year, in this case a significant fluctuation.

Some of the sales benefit would come from a longer holiday shopping season that likely boosted sales, especially because the company began its holiday promotions two weeks earlier than last year, he said. Via, Starbucks’ single-serving instant coffee that went on sale nationwide in September, also should help first-quarter sales.

WHAT’S AHEAD: Analysts will be looking for any specific updates to Starbucks’ efforts to cut expenses.

STOCK PERFORMANCE: During the quarter, which ended Dec. 27, shares rose about 19.3 percent to end the period at $23.66. They closed Tuesday at $23.58.