Starbucks reported its first quarter 2009 earnings today. Overall revenue dropped 7% to $2.6 billion when compared to Q1 2008. The company attributes this loss to decreases in consumer discretionary spending related to the global economic recession. It plans to cut costs by reducing personel and closing underperforming stores.
Starbucks report earnings of $5.4 M for the fourth quarter down 96% from the year before. The company announced that it will open fewer stores internationally than planned and offered a more pessimistic earnings forecast for the coming year. Same-store sales declined 8% in the U.S. as the a consumer slowdown continued to take a heavy toll on the company.
The coffee giant reported a net loss of $6.7 million dollars in its third quarter compared to a profit of $158 million in the year before period. The loss is mostly the result of a restructuring charge related to the company closing 600 underperforming stores in the U.S.
Starbucks Corp reported just a 1.5% rise in first quarter earnings as the company citing slower consumer spending in the US and dairy costs.
Faced with growing competition from cheaper rivals, Starbucks (NASDAQ:SBUX) Corp. is testing offering small cups of drip coffee for $1 with free refills in its hometown.
That's about 50 cents less than the Seattle-based coffee retailer normally charges for an 8 oz. cup of joe, though prices vary from store to store.
But the company said in a statement e-mailed by Starbucks spokeswoman Bridget Baker that the test 'is not indicative of any new business strategy.'
Starbucks would not say when the test began, how many stores are part of it, whether it's considering a similar promotion for any other brews or whether any new test markets are on the horizon.
Starbucks is the world's largest chain of coffee houses, with more than 15,000 worldwide.
In response to slowing growing, weakening performance and increased competition, Starbucks announced that chairman Howard Schultz will take over as chief executive, succeeding Jim Donald. Schultz, who grew the company from a small Seattle bean seller into the world's largest coffee chain, also announced an extensive restructuring at the coffee chain... Shares rallied over 8%.
Bear Stearns analyst cut his rating on the stock to "Peer Perform" from "Outperform" Jan 2, citing higher dairy prices and the company's reliance on lower-income customers at a time when the economy is slowing.
Starbucks reports Q4 earnings. Revenue grows 22% to $2.4B while earnings grow 35%. Despite impressive results, Starbucks reports its first decline in store traffic since it began reporting the figure three years ago. Investors fear that Starbucks has been overly aggressive in its expansion and send shares plummeting
Speculation that SBUX' aggressive growth (the company opens an average of six new stores a day) is cannibalizing revenues at existing stores.
A single "sell" recomendation hit the stock almost 3%, despite dozens of other buying recomendations
Starbucks' 2% drop in same store sales growth and similar decreases in operating margin cause investors to lose confidence in what some say is an "overvalued" stock. Lower luxury consumption levels hits hard on the "affordable luxury" coffee chain, especially after McDonalds launches its own premium coffee in March and steals share from an unresponsive Starbucks. Rising dairy prices take a chunk out of profits, too.
Starbucks chief financial officer said it would be challenging for company to achieve 2007's targeted earnings.
Starbucks switches to using 2% milk instead of whole milk in its products, changing a practice that it has used since inception decades ago. Management cites "consumer preference" as the reason, but skeptics say that Starbucks is just trying to bolster profit margins--2% milk is 8 cents cheaper per gallon than whole milk and the switch could save about US$ 24 million a year.
Starbucks reaffirms that its target for 2007 will be a growth of 20% in net revenue