* Q3 EPS $0.43 vs Street view $0.45
* U.S. traffic slowed in June
* Shares down more than 9 percent
By Lisa Baertlein
July 26 (Reuters) - Starbucks Corp cut its outlook for the current quarter, citing global economic weakness and a recent slowdown in visits in the United States, its biggest market for sales and profits, sending shares tumbling more than 9 percent.
The stunning news from one of the food industry’s top performers followed disappointing results from restaurant chains Chipotle Mexican Grill and McDonald’s Corp and added to worries that U.S. consumers were cutting discretionary spending.
The world’s biggest coffee chain began seeing U.S. traffic slow in June, Chief Executive Howard Schultz said in an interview.
The company, which also missed Wall Street’s estimate for earnings in the latest quarter, has been struggling in Europe for some time.
“We’re dealing with significant global economic and consumer challenges,” Schultz said of the company.
“Traffic trends are noticeably down in many areas across the U.S. and ... have continued in July,” Chief Financial Officer Troy Alstead said on a conference call with analysts.
Up until recently, the relatively affluent U.S. consumers who frequent chains like Starbucks and Chipotle had continued spending despite negative economic headlines at home and around the globe.
“The economic environment is definitely getting tougher,” Edward Jones analyst Jack Russo said.
“Coffee’s an everyday product, but it is a premium product and people can trade down or consumer less,” he said.
Starbucks now expects earnings for the current fiscal fourth quarter to be 44 cents to 45 cents a share, below the average analyst forecast of 48 cents a share.
Shares in the company had brewed up a year-to-date gain of almost 14 percent prior to Thursday’s financial report, based on strong growth and Starbucks’ seeming ability to deflect whatever shock the global economy could throw its way.
Expectations had been very high, Russo said: “It was still a good quarter ... there just wasn’t any margin for a miss.”
Shares in Starbucks dropped 9.4 percent to $47.46 in extended trading.
Net income for the fiscal third-quarter ended July 1 grew a healthy 19 percent to $333.1 million, or 43 cents per share, but still missed analysts’ average forecast by 2 cents per share, according to Thomson Reuters I/B/E/S.
Global sales at restaurants open at least 13 months rose 6 percent, just shy of what analysts expected, according to both Thomson Reuters and Consensus Metrix.
That included a 7 percent gain for the Americas region and a 12 percent jump for the China-Asia Pacific unit.
In Europe, same-store sales were flat. Starbucks long has fought to make its mark on the well-established cafe culture in that region, where government belt-tightening has dented consumer spending.
The company’s forecast for earnings of $2.04 to $2.14 per share next year also was significantly below analysts’ average estimate of $2.28 per share.
Still, its expectation for same-restaurant sales growth in the mid-single-digit percentage range next year is “significantly positive,” said Lazard Capital Markets analyst Matt DiFrisco, who counts Starbucks and Panera Bread Co as his top picks in the restaurant category.