Starbucks film falls short, but stores beat tall order

Starbucks executives refuse to be depressed about the sluggish box-office results for their first movie project, "Akeelah and the Bee."

"Box-office receipts were less than perhaps Lions Gate or the industry had thought, but there were other competing factors," said Starbucks Chairman Howard Schultz, pointing out that the studio also experienced a slow start with the movie "Crash," which won three Academy Awards, including best picture.

"I think this movie is going to have a long tail to it," Schultz said of "Akeelah and the Bee," which opened last weekend and grossed $6 million, ranking it eighth at the box office.

During a second-quarter conference call Wednesday, Schultz reiterated that Starbucks does not want to become an entertainment company but finds entertainment "highly complementary to who we are."

In exchange for an undisclosed amount of equity in the movie, Starbucks is marketing "Akeelah and the Bee" — the tale of an 11-year-old girl with a gift for spelling — with in-store promotional materials on items including cup sleeves, coasters and flash cards. It sells the movie soundtrack and in late summer will sell the DVD.

The Seattle-based coffee giant is considering book offerings for customers, as well, Schultz said, but he did not elaborate.

Starbucks reported strong second-quarter earnings Wednesday of $127.3 million, or 16 cents a share. That's 2 cents better than analysts had forecast, according to Thomson Financial.

Sales at stores open at least 13 months rose 10 percent for the quarter, and net revenue increased 24 percent to $1.9 billion.

Starbucks opened 424 stores during the second quarter, which ended April 2. By the end of April, it had 152 more, for a total 11,377 worldwide.

The company plans to open 1,800 stores this fiscal year, which ends Oct. 1. At that rate, it would take about 10 years to reach its long-term goal of 30,000 stores worldwide.

But Schultz and others are saying that number might be too small.

"We're asked by customers daily about bringing Starbucks to their neighborhood," said Jim Donald, Starbucks' president and chief executive.

Much of the growth will happen internationally, particularly in China.

In less than a year, Starbucks has hired a group of about 20 people to oversee its Chinese operations from Shanghai, including taking charge of marketing, finance, store operations, corporate social responsibility and other functions for Starbucks there.

"To get there, we had to become Chinese and run it as China Starbucks, not Starbucks China," Donald said, adding that many employees running that operation are Chinese and have worked for companies based in China.

Starbucks has 3,320 stores in 36 foreign countries, including more than 175 in mainland China, 63 in Hong Kong and more than 170 in Taiwan.

The company wants to expand in countries where it already operates, including the U.S., and open stores in Brazil, Russia and India, Donald said.

Its second quarter was marked by the launch of several products, including one of its most successful new beverage offerings, Cinnamon Dolce Latte. Customers also liked two new green-tea beverages: Tazo Green Tea Latte and Blackberry Green Tea Frappuccino Blended Crème.

Starbucks raised its fiscal 2006 per-share earnings target to 71 cents or 72 cents a share, up from 68 cents to 70 cents a share.

Starbucks said its chief financial officer, Michael Casey, 61, plans to retire. The company hopes to hire his replacement by the end of the year, and Casey is to help with the transition.

The company's results were released after the markets closed Tuesday. In after-hours trading, shares slipped 65 cents to $36.70

Melissa Allison: 206-464-3312 or mallison@seattletimes