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April 30, 2008

Recession -- and more? -- hits Starbucks

Starbucks' profit for the first quarter missed analysts' estimates and fell sharply from the same period last year, the company just reported. Company made 19 cents a share. Wall Street had expected 21 cents, on average. Profit fell 28 percent. The company blamed the recession.

"Fiscal 2008 is a transitional year for Starbucks and, while our financial results are clearly being impacted by reduced frequency to our U.S. stores, we believe that as we continue to execute on the initiatives generated by our transformation agenda, we will reinvigorate the Starbucks Experience for our customers, and in doing so, deliver increased value to our shareholders," commented Howard Schultz, chairman, president and ceo.

Be careful when they say "transitional year." They've been saying that about the Orioles since 1999 or so. This may be worse than just a cyclical bump for the coffee chain. It said it had a "mid-single digit decline" (percentage) in sales at stores open at least a year. That should be disturbing for shareholders. The company's phenomenal growth story appears to be transitioning into something else.

Posted by Jay Hancock at 4:54 PM | | Comments (0)
        

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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