Starbucks posts first quarterly loss
Coffee giant Starbucks Corp. has posted its first quarterly loss due to poorer-than-expected sales and a large restructuring charge.
It lost $6.7 million US, or one cent a share, in the three months ended June 30. That compares to a profit of $158 million, or 21 cents per share, for the same period last year.
The company absorbed a restructuring charge of $168 million in its third quarter. These extra costs are associated with the company's plans to scale back its global operations.
Once that charge is added back, Starbucks made 16 cents a share. Analysts had expected the coffee giant to come in two cents higher.
"I want to acknowledge some of the difficulty that many of you may be experiencing given the tough operating environment we are facing," Howard Schultz, Starbucks' president and chief executive officer, said in an e-mail message to the company's franchisees.
Three-month Starbucks stock chart.(New York Stock Exchange)Starbucks' sales also missed investment analysts' estimates. The company posted revenue of $2.57 billion in the three-month period this year, up nine per cent compared to the same time last year.
Company watchers, however, had forecast sales of $2.61 billion.
Starbucks has been a victim of its own success.
Since the company went public in 1992, quarterly sales gains of 20 per cent or more were common. Management even set a goal of reaching 20,000 coffee outlets worldwide.
Earlier this month, however, Starbucks announced that it would close 600 stores. In addition, the company said it would look to reduce its workforce by almost 1,000.
Starbucks has approximately 15,000 stores in 43 countries.
It also told investors that it expected to post an annual earning-per-share "in the mid-70-cent range." That would imply a drop from how much analysts believed Starbucks would make in fourth quarter.
The company has already earned 59 cents a share for its first nine months. Starbucks' experts originally forecast a per-share profit of 20 cents a share in the final three months of the year.
For Starbucks to reach that target would mean the company would beat its own guidance.
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