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Starbucks Raises Its Goal to 40,000 Outlets Worldwide

October 06, 2006|From Reuters

SEATTLE — Starbucks Corp. on Thursday raised its long-term expansion goal to 40,000 stores from 30,000 and said it was nowhere close to exhausting opportunities in North America, even as possibilities appeared internationally.

The company, known for its ubiquity in parts of the United States, expects to have 20,000 outlets in the United States and 20,000 internationally, Chief Executive James Donald said during a meeting with analysts in Seattle.

He did not give a specific timeframe for that target. The previous target was also equally split between North America and international markets.

The world's largest coffee shop chain had 12,241 locations at the end of fiscal 2006, which ended Oct. 1, and $7.8 billion in full-year revenue.

Starbucks said its customer base was broadening, with more Latinos, women and less-affluent and less-highly-educated customers buying its coffee.

Donald forecast having 14,641 stores by the end of fiscal 2007.

"We don't believe that we are even 50% through to the unique opportunity we have in North America," founder and Chairman Howard Schultz said during the meeting.

"We are extremely pleased with the development of our international business and see it as a huge opportunity, but as we sit here today, we have never been more enthused and more aggressive about the unique opportunities we have to expand the footprint in existing cities across America."

Shares of Seattle-based Starbucks rose $2.73, or 7.6%, to $38.69.

To drive sales momentum at its U.S. stores, Starbucks in recent years has added lunch items such as salads and sandwiches and has also boosted its entertainment offerings.

The company has parlayed successful sales of music compilation CDs into a small but profitable business that has included deals for exclusive content with musicians such as Alanis Morissette and Bob Dylan.

As part of that strategy, the company Thursday said it had struck a deal with Apple Computer Inc. to put Starbucks Entertainment-branded offerings on Apple's popular iTunes digital music store.

Starbucks did not pay a fee to iTunes, Chief Financial Officer Michael Casey said.

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