Much of the losses are due to one-time charges, but it’s still a fairly stark indicator that discretionary spending is coming to a halt:
This is the time of year when Starbucks rolls out sweet holiday drinks like Eggnog Latte and Peppermint Mocha Twist.
But its financial performance, amid a global economic crisis and consumer reluctance to indulge in expensive daily treats, is proving to be particularly bitter.
On Monday, the Seattle-based coffee chain reported disappointing results for its fourth quarter operating period and for its entire 2008 fiscal year, during which company pioneer Howard D. Schultz returned as chief executive and Starbucks stock lost more than half its value.
Starbucks reported modest profits of $5.4 million, or 1 cent a share, compared with $158.5 million or 21 cents a share, in the period a year ago. Revenue in the fourth quarter rose 3 percent to $2.5 billion, up slightly from $2.4 billion a year ago.
But even with a $105 million charge related to its turnaround plan, which it said accounted for 9 cents a share, Starbucks performed below the expectations of Wall Street analysts surveyed by Thomson Reuters, who anticipated profit of 15 cents a share.
Starbucks stock was off more than 6 percent in after-hours market trading. Shares closed down 3.3 percent, to $10.20, in regular trading.
For the year, Starbucks had revenue of $10.4 billion, up from $9.4 billion last year. But profit fell to $315.5 million for the year compared with a $672.6 million in 2007, as the company was rocked by the twin consequences of overexpansion in many markets and the global economic downturn.
Underlying the company’s woes is the decline in same-store sales, or sales at cafes open at least a year. Same-store sales in the United States started to decline this year for the first time and fell 8 percent in the fourth quarter alone.
I’m still a fan, but then I never order the expensive latte nonsense.
November 11th, 2008 at 11:25 am
I spent eight year working for starbucks, this report brings me such joy, lets not forget not only the 1000 they reported laid off, but all the others old timers that they fired on the down low to cut cost. please stay home make a cup of coffee or support the working man Ma and Pop Stand this is a evil empire, sell your stock this is a sinking ship
November 12th, 2008 at 8:50 pm
[...] Starbucks profits drop nearly 100% (Below the Beltway) [...]