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Originally published January 26, 2012 at 1:46 PM | Page modified January 26, 2012 at 10:12 PM

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Starbucks posts double-digit gains in 1Q sales and profit

Starbucks is expanding fast in China, where it opened its 500th store during the quarter. It opened in five new cities, bringing Starbucks cafes to 41 cities in China.

Seattle Times business reporter

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Starbucks' profit climbed 10 percent to $382.1 million for the first quarter ended Jan. 1, on revenue that grew 16 percent over last year to $3.4 billion, the Seattle-based coffee chain said Thursday.

It added 241 new stores during the quarter, its biggest quarterly growth since summer 2008.

It's on schedule to open the 800 new stores worldwide that it promised investors for fiscal 2012. That would mark its biggest expansion since 2008.

The consumer-products division, which sells everything from bottled Frappuccino to Starbucks' new single-portion packs for Keurig coffee machines, saw a 72 percent boost in revenue to $335.8 million.

Starbucks officials have said they expect that segment's sales to rival its much larger cafe network.

That division was hurt most by high coffee costs, Chief Financial Officer Troy Alstead told analysts during a telephone conference call. Starbucks expects coffee and other commodity costs to shave 21 cents from earnings during fiscal 2012, about 18 cents of it in the first half.

During the first quarter, operating expenses rose 18 percent to $2.9 billion for the quarter.

Its 12,500 stores in the U.S., Canada and Latin America posted an 11 percent revenue gain to $2.6 billion. That unit, Starbucks' largest, has 188 fewer stores than a year ago.

By contrast, its Asia region added 325 stores the past year. Its nearly 3,000 cafes saw a 38 percent jump in revenue to $166.9 million.

Starbucks is expanding fast in China, where it opened its 500th store during the quarter. It opened in five new cities, bringing Starbucks cafes to 41 cities in China.

"What we see is continued acceptance of the Starbucks brand and the Starbucks experience," said John Culver, who runs the Asia region for Starbucks.

Nearly a quarter-million customers in China have signed up for Starbucks' loyalty program.

Responding to an analyst's question about how the China rollout is going, Culver said the company is ramping up its infrastructure, product-distribution and computer systems there and working to hire and train employees for the new stores.

Starbucks also has added design and research-and-development capabilities in China "to really capture the consumer trends in China and to drive innovation that really is going to be impactful."

Starbucks' 1,783 locations in Europe and the Middle East reported revenue gains of 17 percent in the quarter to $303 million.

Schultz paid less

Starbucks also said Thursday that CEO Howard Schultz was paid $16.1 million in the fiscal year ended Oct. 2. That included a $1.4 million salary and $14.5 million in stock, options and other equity compensation, and is down from his fiscal 2010 pay of $21.7 million.

Alstead, at $4.3 million, was the next highest paid executive.

Starbucks' annual shareholders meeting is 10 a.m. March 21 at Seattle Center's McCaw Hall.

The earnings report came after the market closed Thursday. During regular trading, shares rose 57 cents to $48.34.

But then they dived $1.04 to $47.30 in after-hours trading, because the low end of Starbucks' projected range for fiscal 2012 earnings — $1.78 to $1.82 a share — was a penny less than Wall Street expected.

The stock remains near a 52-week high of $48.39.

Melissa Allison: 206-464-3312 or On Twitter @AllisonSeattle.

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