Starbucks to slash U.S. store openings
LOS ANGELES (Reuters) - Starbucks Corp said on Wednesday it would slash U.S. coffee store openings through 2011 to cut costs in the face of weak U.S. sales and to focus more on growth abroad.
The company, which warned last week of the worst economic environment in its history, said U.S. customer visits had slowed but estimated growth in international business profit margins over the next few years.
Investors and analysts have been pushing for Starbucks to cut plans for U.S. expansion.
"It's not really surprising that they've slowed their store growth. The fact that they are making plans to slow it is certainly better than what they were telling us before," said John Langston, an analyst at Hodges Capital Management.
On Wednesday, the coffee shop chain posted fiscal second-quarter net income of $108.7 million, or 15 cents per share, compared with $150.8 million, or 19 cents per share, a year earlier.
Results from the most recent quarter included restructuring-related charges of about 3 cents per share.
Prior to its warning last week, analysts had been looking for a second-quarter profit of 21 cents per share. The results matched lowered estimates, according to Reuters Estimates.
Total revenue rose 12 percent to $2.53 billion. The company said revenue was lower than expected due to a mid-single-digit decline in U.S. same-store sales. Starbucks' U.S. stores delivered 77 percent of total revenue and experienced slower traffic during the quarter.
"Our financial results are clearly being impacted by reduced frequency (of visits) to our U.S. stores," Chief Executive Howard Schultz said in a statement.
Starbucks said it planned to reduce its fiscal 2008 U.S. store openings to 1,020 from its previously lowered target of 1,175. U.S. company-owned and licensed store openings would be limited to 400 per year in 2009-2011, while international openings in those years would range from 1,050 to 1,300.
Starbucks shares ticked up 2 cents to $16.25 from their Nasdaq close of $16.23. They had gained 3 cents during regular trade.
(Reporting by Lisa Baertlein; Editing by Braden Reddall, Richard Chang)
