TBO.com - TBO is Tampa Bay Online

Store Closings Pull Cream From Starbucks' Profit

ADVERTISEMENT

The Associated Press

Published: July 31, 2008

NEW YORK - Coffee chain Starbucks Corp. said Wednesday that costs related to its closure of 600 underperforming stores led it to post a loss for its fiscal third quarter.

The Seattle-based company reported a loss of $6.7 million, or 1 cent a share, compared with a profit of $158.3 million, or 21 cents a share, a year earlier. Starbucks said it earned 16 cents a share once the costs for restructuring and closing stores are excluded.

Analysts polled by Thomson Financial expected a profit of 18 cents a share on revenue of $2.61 billion.
Starbucks said revenue rose 9 percent to $2.57 billion from $2.36 billion in the third quarter of 2007.

Most of the increase was from sales at the company's international locations and at newer stores in the United States.

Same-store sales, or sales at stores open for at least a year, fell in the mid-single-digits in the United States.

(Same-store sales is a key indicator of retailer performance because it measures growth at existing stores.)

The decline, Starbucks said, was a "slight deceleration" from the second quarter, when it also reported a "mid-single-digit" decline in same-store sales in the United States.

Although sales jumped overall internationally, Starbucks said sales growth slowed in Canada and traffic took a hit in Britain. Analysts and investors had largely been expecting sliding traffic in Britain, where consumer confidence in the economy has taken a hit.
Starbucks also cut its profit guidance for 2008 to the "mid-seventy-cent" a-share range, excluding costs. Previously, the company had warned that its profit may fall below the 87 cents a share it earned a year ago.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT