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Starbucks 3rd-quarter profit jumps as customer visits, spending increase

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NEW YORK — Starbucks said Thursday its quarterly profit jumped 22 percent as pricier drinks and food helped lift sales at its U.S. cafes.

The Seattle-based coffee chain said sales rose 8 percent in its flagship Americas unit. In the U.S., which makes up the majority of the unit, the company has been pushing up sales with price hikes and offerings like S'more Frappuccinos and Flat White espresso drinks that cost a little more.

Starbucks Chief Financial Officer Scott Maw said in a phone interview that people are even "trading up" to newer, pricier breakfast sandwiches, such as one served on a croissant bun. Maw noted that more people are getting food with their orders as well.

Customer visits are increasing too, boosted by the company's mobile app. The app, which incorporates its loyalty program, encourages people to return by rewarding them with "stars," which can be used toward free drinks and food.

Lower costs for ingredients like dairy helped improve the company's operating margin.

Earlier in the day, Dunkin' Donuts said sales rose 2.9 percent at established U.S. stores. Parent company Dunkin' Brands Group also attributed the increase to higher customer spending and visits.

PHOTO: In this July 16, 2015 photo, a customer walks out of a Starbucks with a beverage in hand, in New York. Starbucks reports quarterly financial results on Thursday, July 23, 2015. (AP Photo/Mark Lennihan)
In this July 16, 2015 photo, a customer walks out of a Starbucks with a beverage in hand, in New York. Starbucks reports quarterly financial results on Thursday, July 23, 2015. (AP Photo/Mark Lennihan)

On a global basis, Starbucks Corp. said sales rose 7 percent at established locations. That included an 11 percent increase in Asia and a 3 percent increase in the segment encompassing Europe, the Middle East and Africa.

Total revenue including new store openings rose 18 percent to $4.88 billion in the period, topping the $4.86 billion Wall Street expected.

For its fiscal third quarter, Starbucks earned $626.7 million, or 41 cents per share. Adjusted earnings not including one-time items was 42 cents per share.

Analysts on average expected 41 cents per share, according to Zacks Investment Research.

For the current quarter ending in September, Starbucks still expects its per-share earnings to range from 42 cents to 43 cents. The company now expects full-year earnings per share in the range of $1.57 to $1.58, up from a prior range of $1.55 to $1.57.

In after-hours extended trading, Starbucks shares rose 5.6 percent to $59.71.


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