Starbucks Roasted by Weak Economy
SAN FRANCISCO - Coffee behemoth Starbucks (SBUX) took a big hit as it tried to transform its business, posting a third-quarter loss and offering a bleak outlook for the year.
The Seattle-based company reported a net loss in the third quarter of $6.7 million, or 1 cent a share, compared to a profit of $158.3 million, or 21 cents, a year ago in the same period.
Starbucks earned 16 cents a share for the quarter but that was offset by the estimated 17 cents a share that had gone toward its transformation plan, which includes shuttering about 600 underperforming stores at a cost of $167.7 million.
Analysts had expected earnings of 18 cents a share, excluding the costs associated with the transformation plan.Revenue for Starbucks increased 9% in the third quarter to $2.6 billion compared with $2.4 billion a year ago. That matched estimates on Wall Street. "While we recognize the near-term impact to our business from this transitional year, we also believe this is the right approach toward strengthening our business model and creating a healthy, solid foundation for fiscal 2009 and beyond," said Chief Executive Howard Schultz in a statement. "The store closures and organizational restructuring we announced this month resulted from rigorous evaluations of the entire business," he continued. "While this has led to difficult decisions that impact the lives of our partners, customers and the communities we serve, these were necessary actions to transform our business and allow us to focus on delivering significant improvement in our long-term financial performance."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV