STARBUCKS, the ubiquitous coffee shops chain, aims to almost double in size to 10,000 outlets in the next two years after it unveiled record sales.

The company, which already has 6,200 coffee shops, most of which are in America, said that it aims to operate in as many as 60 countries by the end of 2005 with about 1,200 new coffee shops set to open this year alone.

The global expansion plans were confirmed as the company said that revenues for the first quarter of its new financial year increased to a record $1 billion (£620 million) from $805 million in the same period last year.

Profits for the quarter reached $80 million, compared with $68.4 million in the first three months of the 2001 financial year.

Sales at Starbucks coffee shops leapt by an unprecedented 25 per cent to $849 million while like-for-like sales rose 9 per cent. The remainder came from sales of products to other retailers. “We are proud of the unified effort from our more than 60,000 partners (employees) working throughout the company that resulted in Starbucks’s strongest quarterly performance to date,” said Orin Smith, the president and chief executive.

He added: “Specifically, this period marked the first $1 billion revenue quarter in the company’s history. Not only did the company exceed its stated revenue growth target, but it also exceeded its comparable store sales and earnings- per-share targets. Based on our strong first-quarter results, we are excited about the prospects for the remainder of fiscal 2003 and beyond.”

But the increase in profits was bolstered by a one-time gain related to the $13.4 million sale of a large part of Starbucks Japan, which has performed dismally.

Howard Schultz, the chairman and architect of the company’s international expansion, said slumping profits at Starbucks Japan reflected a weak local economy and heavy investment in new stores. “We believe very strongly in growth and development and what that market is ultimately going to produce for us, which is going to be a very, very big and profitable business in Japan.”

But he declined to give any specific details of when he expected the Japan arm to improve.

Analysts believe that Starbucks will focus on the largely untapped overseas market in the next two years because the North American market, home to about three quarters of its outlets, is saturated with Starbucks.

A Starbucks customer in mid-town Manhattan, where it is common to find as many as four of the coffee shops encircling a single city block, said: “I cannot think of a part of the city where there is not a Starbucks. If they wanted to expand here they would have to start buying space on the freeway.”

The company owns half of Starbucks Japan and all of its stores in Britain, Australia and Thailand, but its other international stores are majority-owned by foreign partners.

The company has no debt on its balance sheet and $513 million in cash and short-term investments but is not considering paying a dividend, Mr Smith said.

It is more likely that Starbucks will increase investment in its overseas companies and franchises, an option that is made available every five years. “We have not yet discussed the issue of a dividend,” Mr Smith said.