SBUX Summary: Struggling in Weak Consumer Environment

The company also reiterated that earnings for the full fiscal year of 2008 will likely be less than the 87cents a share achieved in 2007. Although they declined to provide a full-year earnings estimate, Starbucks officials did estimate that revenue for the year would increase by 12% to 13%.

The projection of the number of new store openings was reduced to 1020, with 620 of those company-owned and the rest operating as licensed stores. The estimate for capital expenditures remained unchanged, however, as store transformation costs would more than offset the reduced number of new stores.

This was the company's first year-over-year decrease in earnings in eight years. Increased competition from traditional competitors such as Dunkin' Donuts, as well as new entries like McDonald's (MCD - commentary - Cramer's Take), has caused Starbucks to struggle in the current weak consumer environment. CEO Schultz has said that he feels a renewed concentration on the core coffee-drink business will help revitalize the chain in fiscal 2008 and beyond.

For Melvin's preview heading into the Starbucks conference call, please click here.

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At the time of publication, Melvin had no positions in the stocks mentioned, although positions may change at any time.

Tim Melvin is a writer from Stevensville, Maryland, who spent 20 years a stockbroker, the last 15 as a Vice President of Investments with a regional firm in the Mid Atlantic area. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Melvin appreciates your feedback; click here to send him an email.