The analysts were right about one thing: Starbucks Corporation (NASDAQ: SBUX) recorded revenues of $2.6 billion in the third fiscal quarter of 2008, ending June 29, 2008. They were not so right, however, about the earnings per share, which they called at 18.3 cents. The coffee giant recorded a loss of $6.7 million, or about a penny a share, due to charges related to store closings. According to financial reports, the comparable figure is 16 cents a share. And Robert W. Baird analyst David Tarantino could have written the report on same-store sales (eerily, it was in his exact words): Starbucks' press release stated that the company suffered "a mid-single-digit decline in U.S. comparable store sales, and was a slight deterioration from the second quarter."U.S. revenue growth was due to store growth, an odd circumstance in an environment where 600 stores will be closing this month and next. A bright spot is the Global Products Group, which attained a 4% increase in revenues, generated mostly from ready-to-drink products like iced coffee beverages.
Excluding the 19 cents of year-to-date restructuring charges, Starbucks now expects annual earnings per share to be "in the mid-seventy-cent range" with fiscal 2009 results between $0.90 and $1.00 per share. Investors were initially thrilled at the results (maybe they feared worse?), driving Starbucks shares up 63 cents, or 4.29%, to $15.30. I'll be listening to the investor call over the next hour and will update the post with any particularly interesting bits.
Interesting notes from conference call:
- Schultz says the stores nearby others that are closing are already showing "incrementality." I love that made-up word. So cannibalization was occurring, I suppose.
- He says that Vivanno, Pike Place and Sorbetto products are showing an increase in "take rate," the amount of products sold in a store. In a "normalized environment" (I suppose, a good economy) this would have already affected same-store sales positively, he says. He's also very snotty to the analyst who asked the question.
- Schultz projects "surprises" in 2009 calendar of product releases that he thinks we'll like. Wonder what those might be?
- "Starbucks is going to win!"
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Reader Comments (Page 1 of 1)
7-30-2008 @ 7:39PM
wily said...
Howard is looking to 09 for relief? By the time people have discretionary income again the coffee industry will be so diluted SBUX will never come back.
7-30-2008 @ 9:48PM
Mr. noitall said...
Oh well, it looks like the story is over for "fad" company Starbucks. I think I could help them out. If Howard is interested, tell him to contact me.
7-31-2008 @ 12:22AM
Derek said...
During these times of financial struggle, it is important to down-size and remove some of the over-saturated Starbucks business locations. Streamlining the business will make for better profits in key locations. Currently, there is no need to have two Starbucks coffee shops in a one block radius. After the down-sizing effort, and when and if business picks up again for them, then they can look to expand once more.