Starbucks Posts First Quarterly Loss
Los Angeles Starbucks Corp. posted its first quarterly loss as a public company on Wednesday and said its U.S. coffee chain would shrink in the year ahead. However, investors stunned by months of uncertainty sent shares up 4% as Starbucks stuck by its profit target for 2009, according to a Reuters report.
Starbucks had been an engine of steady expansion since it went public in 1992, but sales growth has been slowing in the United States for more than a year, and the problem worsened as the housing market slumped and gas prices rose, the report said.
On Wednesday, the company lowered its 2008 profit forecast, saying fewer customers were visiting U.S. stores and costs were rising.
CEO Howard Schultz warned that U.S. consumers were still hurting and cut the 2008 U.S. store-opening target for the third time this year.
"We want to be as cautious as possible and not over-expand at a time when the consumer may be under significant pressure," Schultz said on a conference call.
Starbucks reported a fiscal third-quarter net loss of $6.7 million compared with its year-earlier net profit of $158.3 million. Costs related to store closings and restructuring pushed it into a loss.
Total revenue rose a slower-than-expected 9% to $2.6 billion.
Starbucks said traffic during the latest quarter softened in the United Kingdom -- which is coping with its own housing crisis -- and that sales lost momentum in Canada.
The chain also said Wednesday that it will open fewer U.S. locations in 2008. For 2009, Starbucks said it will open 165 new stores in the U.S. but will also close 225 locations.
Internationally, Starbucks is planning to open about 900 net new stores in 2009, compared with about 1,050 previously.
For 2009, the company now sees capital expenditures of about $750 million, reflecting the reduced store targets for the U.S. and International segments.