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Updated from April 24


(SBUX) - Get Starbucks Corporation Report

slid 6% Friday after trimming its fiscal 2003 earnings estimate by a penny.

The big Seattle coffee-shop chain reduced its fiscal-year earnings estimate to 66 cents or 67 cents a share from 67 cents or 68 cents, citing April 16's agreement to buy Seattle Coffee Co. The company said it still expects to boost 2003 revenue by 20% from a year ago, with monthly same-store sales growth in a range of 3% to 7%.

The mild shortfall knocked the stock down $1.53 to $23.70. The setback comes after Starbucks had hovered near its highs of the year, having been one of the few


issues to continue on a steady rise through the massive tech selloff of recent years.

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The development could signal a margin-tightening trend at the company.


contributor Mike Norman recently suggested that coffee prices may be ready to get off their near-record-low levels of recent months.

"Recent price action and forecasts of a freeze in Brazil (largest exporter of raw coffee to the U.S.) has coffee bubbling," he wrote in a


post Tuesday. "With spot coffee prices rising ... margins are likely to deteriorate, right at a time when Starbucks is mounting an aggressive (and costly) global expansion. This stock looks like it is shaping up to be a great short." Norman had no position in the stock at the time of publication.

Overlooked was that Starbucks posted strong profits for the second quarter ended March 30. Earnings jumped to $52 million, or 13 cents a share, from $32 million, or 8 cents a share, a year ago. Revenue rose 22% to $954 million, as same-store sales rose 7% from a year earlier.

Starbucks said that for 2003 it would open 1,200 new stores globally, including 525 company-operated stores and 275 licensed locations in North America. Internationally, Starbucks will open 75 locations in company-operated markets and 325 in licensed markets. The company will spend some $400 million to $425 million on capital projects in 2003.