Starbucks details store closing plan as posts loss
LOS ANGELES (Reuters) - Starbucks Corp laid out detailed plans on Wednesday for closing U.S. stores this year and next, cheering investors who felt the coffee company overbuilt at home and sending its shares up 4 percent.
Still, the ubiquitous chain posted its first-ever quarterly loss as it took charges for stores closures.
Starbucks has already announced it will close 600 U.S. stores and 61 in Australia. The company expects to make 200 of the U.S. store closures in the fourth quarter and the remainder in fiscal 2009, beginning in October.
The coffee chain reaffirmed its fiscal 2009 forecast for adjusted earnings of 90 cents to $1 per share and said it now expects to have a net decrease of 60 stores in the United States in that period.
"It looks like the F09 guidance reiteration of $0.90-$1.00 may be achievable," RBC Capital Markets analyst Larry Miller told Reuters in an e-mail, who said the news could put a floor on company shares that have lost nearly half of their value over the last year.
Starbucks reported a fiscal third-quarter net loss of $6.7 million, or 1 cent per share, its first since the company went public in 1992. In the year-earlier quarter its net profit was $158.3 million, or 21 cents per share.
Excluding 17 cents per share in charges primarily related to store closures and restructuring, Starbucks had a per-share profit of 16 cents, lagging the 18 cents average Wall Street target, according to Reuters Estimates.
Total revenue rose a slower-than-expected 9 percent to $2.6 billion from $2.4 billion, as U.S. business deteriorated from the prior quarter and contributed to a mid-single-digit decline in sales at established stores.
Citing factors such as weak traffic and increased costs, Starbucks now expects full-year fiscal 2008 earnings in the mid-70 cent range, excluding the charges related to store closures and its restructuring.
The company lowered its U.S. store opening targets for fiscal 2008 to about 900 net new stores, evenly distributed between company-operated and licensed.
Internationally, Starbucks now sees about 825 net new store openings during fiscal 2008 -- including the closures in Australia.
Capital expenditures for fiscal 2008 are now expected to be about $1.0 billion, below the $1.1 billion previously forecast.
Internationally, Starbucks is planning to open about 900 net new stores in 2009. Two thirds of these stores are expected to be licensed.
For 2009, the company now sees capital expenditures of about $750 million, reflecting the reduced store targets for the U.S. and International segments.
Starbucks shares rose to $15.25 from their Nasdaq close of $14.67. Over the last year, Starbucks shares have lost more than 45 percent of their value.
(Reporting by Lisa Baertlein; Editing by Gary Hill and Andre Grenon)
