Starbucks CEO Says Company Will Finish 2006 "Right on Target"


James Donald, president and chief executive officer of Starbucks, told CNBC’s “Squawk Box” that he expects the company to finish 2007 “right on target.”

Starbucks, the world’s largest coffeehouse chain, reported net income of $150.8 million, or 19 cents a share, compared with $127.3 million, or 16 cents a share, for the same period a year ago. The consensus Wall Street estimate was 19 cents a share.

“We look at the performance as a great quarter for us,” Donald said Friday. “But it’s even better when you look at we lapped probably the highest quarter in the company’s history last year with 10% comps. We think that we’re poised to finish 2007 right on target.”

In fiscal 2007, Starbucks said it expects to earn 87 to 89 cents a share. It expects revenue to increase about 20% and same-store sales to increase 3% to 7%.

Donald said he wasn’t concerned about the competition, including McDonald's and privately held Dunkin Donuts, moving into the premium coffee sector.

“We don’t really consider or talk about our competition,” Donald said. “We’re very mindful of the market that’s out there. What we like to think is that at Starbucks, it’s about the coffee and the experience. When you see some of the competitors come into the super-premium category, we’re a small piece of (that sector) – less than 10%. So, we think the education of super-premium qualify coffee helps all of us.”

He said Starbucks has an “agreement in principle” to use the names of selected Ethiopian coffee, but declined to go into detail.

“We continue to work toward this agreement which deals with the distribution and marketing and recognizing the significance of the Ethiopian coffee names,” Donald said.