Starbucks 4Q 2008 earnings: Everybody Hurts ... when there are store closings

Schultz calls the reaction to its Gold Card program "enthusiastic" and claims the company is well-positioned to provide "value" to its consumers. Really? These words you are using, Schultz: "value" and "premium," they seem at odds with one another. You can't have it both ways. Investors seem to agree; the stock was down 35 cents during the trading day, and an additional 40 cents after hours once the earnings news hit, to $9.88.

Higher costs were due to a number of factors; labor costs were up "as a percentage of revenue" (perhaps staffing for the promised growth rather than actual results?) and store costs were up for similar reasons -- however, inventory write-downs were higher for the period, a clue that Starbucks is backing away from its strategy of recording a large proportion of its income from coffee accessories, CDs, movies, books, toys, and the thousand other sorts of merchandise that has appeared next to the cash register in many stores.

2009 is looking somber, with a negative net store opening in the U.S. -- 225 closed stores and 205 new licensed stores. The company is taking a "cautious" approach overseas, with a net 700 new opened stores, many of which will be licensed. Management is majorly sandbagging its results for the first fiscal quarter of 2009, ending December 31, 2008, evidently hoping for very little from this holiday season.