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Starbucks wants 40,000 stores worldwide, up from 30,000 goal

Starbucks wants 40,000 stores worldwide, up from 30,000 goal

The Starbucks Corp. coffee chain, its stock surging amid healthy sales at existing locations, on Thursday set a new long-term goal to have 40,000 coffee stores worldwide, 10,000 more than its previous target and more than triple the current number.
Starbucks also announced at an analyst meeting in its hometown of Seattle a deal to feature the music it sells in its stores on Apple Computer Inc.'s iTunes online music service.
The coffee retailer did not give a timeline for its long-term growth plans but said it expects to have more than 14,000 stores worldwide by the close of its fiscal year ending in the fall of 2007. There are currently about 12,000 Starbucks stores around the world.
Starbucks said half of the eventual 40,000 stores will be outside the United States. The company said Thursday it plans to expand into Brazil, Egypt, Russia and India by the end of next year, giving Starbucks a presence in 40 countries worldwide.
"We've seen the Starbucks experience become universally accepted around the world," Starbucks Chief Executive Jim Donald told analysts and journalists.
Starbucks said late Wednesday that sales at stores open at least 13 months increased 6 percent for the five weeks ended Oct. 1, compared to the same period ended Oct. 2, 2005. Analysts polled by Thomson Financial had predicted same-store sales would increase 3.3 percent.
Starbucks' shares climbed $2.73 to close at $38.69, up 7.6 percent, Thursday on the Nasdaq Stock Market. The stock had jumped 5.7 percent on Wednesday before the sales report. The stock has traded between $24.86 and $39.88 over the past year.
The expansion plans are being fueled in part by a customer base that is broadening to include people with lower incomes and education levels, said Anne Saunders, senior vice president of global brand strategy and communications.
Five years ago, Starbucks estimated the average income for a person visiting one of its U.S. locations for the first time was $92,000 (euro72,300). Now, the company says the average income for first-time customers is $80,000 (euro62,900).
Starbucks also said it is seeing more new customers without college degrees, and is seeing an increase in first-time visitors who are Hispanic.
The average age of first-time customers has increased over the five-year period, from 40 to 42 years old, which Saunders attributed in part to an aging U.S. population.
Saunders said the company believes that one key reason even more people do not go to Starbucks is because it is not convenient _ which is why the company thinks the business can support such massive growth.
Saunders also said Starbucks no longer thinks of its main competition as just high-end coffee retailers. Instead, the company is targeting every cup of coffee consumed in the United States. Despite the chain's ubiquitous presence, Starbucks Chairman Howard Schultz said the company believes it only captures about 8 percent of the overall U.S. coffee market.
Speaking to The Associated Press, Schultz said the company now thinks it can also convert people who currently drink less-fancy coffee because it has seen success in unlikely areas, such as rural locations and stores located off highways.
Starbucks has a "much broader universal appeal than we ever imagined," he said.
Starbucks is clearly hoping that appeal extends beyond even those who visit its stores or buy its whole beans. Late Thursday, the company unveiled a vending machine that will let people purchase coffee drinks such as lattes in the same way that people buy a Coke or Pepsi right now.
Dubbing the approach "the smallest Starbucks store you ever saw," Gerry Lopez, senior vice president of global consumer products, said the vending machines will be located in areas where a full store or kiosk would not work.
The company said the vending machines were developed in joint partnership with PepsiCo Inc. The machines, which are scheduled to debut early next year, will deliver warmed lattes, mochas and other drinks in nine-ounce aluminum cans. The drinks will cost $2.50 (euro2).
The Starbucks deal with iTunes is evidence of the company's growing interest in expanding beyond coffee to offer more entertainment, including books, movies and music.
But the strategy is getting some tweaks. Starbucks also said Thursday it was scrapping plans to offer the ability to burn custom CDs in its regular coffee stores. Ken Lombard, senior vice president for Starbucks' entertainment division, said Starbucks will continue to offer that feature in its music-focused Hear Music Coffeehouses, and remains committed to those stores.
Lombard conceded that the box office returns for the company's first movie promotion, "Akeelah and the Bee," were disappointing. But he said the company still likes the idea of promoting a movie and selling soundtrack CDs and movie DVDs in its stores.
Starbucks also said Thursday that it plans to expand the snacks and meals it offers. The company expects about 6,500 stores will be able to serve warm food by the fall of 2008.