Starbucks posted its first quarterly loss as a public company last night and said its US coffee chain would shrink in the year ahead, but investors stunned by months of uncertainty sent shares up 4 per cent as it stuck by its profit target for 2009.
Starbucks had been an engine of steady expansion since it went public in 1992, but sales growth has been slowing in the United States for more than a year, and the problem worsened as the housing market slumped and gas prices rose.
Last night, the company lowered its 2008 profit forecast, saying fewer customers were visiting U.S. stores and costs were rising.
Chief Executive Howard Schultz warned that US consumers were still hurting and cut the 2008 US store-opening target for the third time this year.
"We want to be as cautious as possible and not over-expand at a time when the consumer may be under significant pressure," Mr Schultz said on a conference call.
He also lowered 2008 and 2009 targets for opening international stores. Overseas growth had been cast as the growth engine of a recovering company.
Starbucks, which has been criticized for building too many shops in the United States, announced at the beginning of the month it would close 600 domestic 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.
With the closures, Starbucks expects to have a net decrease of 60 stores in the United States in 2009.
Chief Financial Officer Peter Bocian said the job cuts and store closures would save 17 to 18 cents per share next year.
He reiterated the company's fiscal 2009 forecast for adjusted earnings of 90 cents to $1 per share, a move that analysts said sent shares higher, in part because it was based on modest same-store sales and minimal price increases.
Starbucks reported a fiscal third-quarter net loss of $6.7 million, or 1 cent per share, compared with its year-earlier net profit of $158.3 million, or 21 cents per share.