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Starbucks: No Turnaround Yet
Posted Nov 10, 2008 05:25pm EST by Joseph Weisenthal in Products and Trends, Recession
From ClusterStock, Nov. 10, 2008:
Starbucks caught some buy action a couple weeks after its CEO Howard Schultz suggested that the company was already seeing some slight improvement in business. But there's not much to cheer about yet. In its quarterly earnings report, Schultz says: "Despite a global economic environment which shows no immediate signs of improvement, the steps we took in FY08 position us to deliver EPS growth in FY09... We appear to be more resilient than many other premium brands. And while we cannot call isolated signs of improving sales a trend, we are encouraged by our ability to drive increased traffic at a relatively low cost, as we did on Election Day."
For optimists, that's not much to hang on. Otherwise, the numbers were basically on the low-end of expectations: Revenue was $2.5 billion in the quarter vs. $2.58 billion consensus, and adjusted EPS of $.10 was shy of the street's $.13. Although revenue was up slightly from last year, the real story was in same-store sales, which were down 8%.
Meanwhile, for 2009, the company says it's hoping for a net decrease to its US footprint of 20 stores, continuing a plan to scale back and shore up its locations.
See Also:
Starbucks Offers Free Coffee To Voters And Non-Voters
Does Starbucks Already See A Rebound?
22 Comments
darren - Wednesday November 12, 2008 04:17PM EST
Thank you VALLEYGOLF2000....it drives me crazy that everyone, including media, refer to "$4 cups of coffee". I agree with everything you said, it is today's social hang out and an affordable luxury....if you know how to order.
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Yahoo! Finance User - Wednesday November 12, 2008 12:05AM EST
It boils down to food cost and believe it or not they operate at about 34% food cost. This is in the normal range for this market. Pizza places operate right at 30% food cost, so where is the larger rip off?