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SBUX’s fiscal 2Q10 earnings came in at $0.29 per share, beating the street’s $0.25 per share estimate.  The company reported 7% same-store sales growth in the U.S and internationally, implying a 250 bp sequential acceleration in 2-year average trends in the U.S. and 150 bps internationally.   Traffic improved in the quarter.

Consolidated operating margins improved 540 bps YOY, reflecting the 740 bp margin expansion in the U.S. and 410 bp growth internationally.

Based on these better than expected results, SBUX raised its full-year 2010 guidance:

EPS: $1.19-$1.22 (from $1.05-$1.08)

Same-store sales: up mid single digits (from modestly positive)

Revenue growth: up high single digits (from mid single digit growth)

Operating margin:

U.S.: 15% to 17% implies 400 to 600 bps YOY growth (from 400 bps)

International: 8% to 10% implies 180 bps to 380 bps YOY growth (from 200 to 250 bps)

CPG remained the same at 35%

Consolidated: 12% to 13% (from 11% to 12%)

Howard Penney

Managing Director