Starbucks (SBUX) is now dead, just not buried.
The company warned on earnings for the quarter and the year. Howard Schultz’s attempt at a turnaround never made it out the door. He was too late firing his old CEO and management and the company’s tremendous growth and success slipped away from him. No matter how wealthy he is now, his shareholders have lost half the value of their stock in just over a year.
For the second fiscal quarter ended March 30, 2008, SBUX now expects revenue to increase 12 percent and earnings per share to be $0.15, compared with $0.19 per share for the same period a year ago. The language used to explain some of the short-fall cannot be found in the any dictionary available at local libraries in most cities. "Starbucks estimates that costs associated with the implementation of its transformation agenda, and charges related to the rationalization of its store portfolio, negatively impacted EPS by approximately $0.03 per share in its fiscal 2008 second quarter." The CFO and someone in PR actually approved that.
Starbucks now expects same-store sales in the US to be down "middle digits" for the quarter just ended. Because of weakness in the company’s home market Starbucks now expects full-year fiscal 2008 EPS to be somewhat lower than the $0.87 reported in fiscal 2007.
Douglas A. McIntyre