Starbucks shares fall almost 4% on June sales concerns

Starbucks' stock was down 61 cents at $14.95 and hit a new 52-week intra-session low on Monday as one analyst expects June quarter sales to worsen from the mid-single-digit decline Starbucks reported for the March period. Analysts say Starbucks is doing the right things to revive its business, but caution that a turnaround will take time. (Read the Reuters story || Seattle Times story)

Comments

[truth]

sbux is trading at 26 forward price/earnings, which, when you know they are gonna close stores and the earnings are gonna drop, well, it's still really expensive compared to mcd which is at 17 forward p/e (and we know they have lots in the pipeline product and storewise.)

It's a vicious spiral. Close stores, earnings plummet, stock gets hammered.

Lather, rinse, repeat.

I was pretty shocked at how the market has treated the news of the layoffs.

If it breaks $15, then the next support level is $12.50 and that would be bad for a lot of people.

Diversify.

[Coffee Soldier]

Hope you all increased your SIP plan when you had the option because this quarter is going to be a great time to buy up cheap shares!!

[THANKS]

Cheap shares that are going to be worthless!!!!

I diversified as of today thanks to truth speaking realistic truths...Thank you, TRUTH.

[tallgrandeventi]

While diversification is always a good idea, I do not suggest you sell any SBUX shares you presently have. Spread your investments around, but hold on to any SBUX shares you presently own, as they will surely rebound. Selling them now, would lock in your losses, while holding them allows you to recoup your losses.

[LAStorePartner]

What crazy thing is Starbucks going to introduce next in an act of desperation? Instant Coffee? This company is becoming Krispy Kreme.

[Chauncey]

I'm a big Starbuck's coffe drinker. I consume at least 4 or 5 ventis a day.Another reason they are failing, is no bold roast after 12 noon!! When you ask for something besides the swill Pikes Place. They act as if it's a chore to make something else!

I'm thinking of switching to Intellgensia brand, where you still can get a bold cup of coffee.

[job hunting barista in SoCal]

lastorepartner-

Vivano & Sorbetto, to answer your question. IE the "health and wellness platform"... July 15...

[Razzle Dazzle]

Instant coffee - it would be funny if it weren't true.

[Formershift]

Lol, go back to Marzocco's and use espresso pods. Nice compromise.

[Barista Bob]

Truth, I think you are a little confused. Closing stores doesn't necessarily mean earnings drop. Overall revenues will decline, but costs will drop more as these are low performing stores. Earnings, as you describe it, will actually go up. In addition, it is not a 'viscous cycle' and wall street has typical responded favorably to retail store closures. If you are a SBUX short I don't think this is a the correct board to pimp your opinion in an attempt to drive the price down. Regarding MCD, I think you'll find that both companies forward P/E is very close, around 15.5 (MCD), 15.9 (SBUX).

[xsbuxdm]

If I were still a partner, I would absolutely be maxing out my SIP right now. I still think there is a bit of a downside, but not much. Dollar cost averaging would definitely work in your favor, regardless.

Yes, it will take time for it to grow, there is definitely upside to it. Not to mention the tax advantages: long term captial gains if you hold it for more than a year, vs. regular income tax rates that are applied to bean stock options.

Doesn't make any sense to do anything with options right now because unless you have options that are at a low cost basis, they aren't worth anything at this point anyway.

The time to diversify or sell was about a year ago...

[Joe]

Ive said it before and I'll say it again....In every statement Ive ready in the past couple of months both Howard and Pete have talked about 2008 as being a "difficult" year and 2009 and beyond as being the years for renewed eps growth. In other words, they're dumping 2008 and, frankly, that makes me happy. If there are tough decisions to be made and contraction to occur, better it happen all in the same year than have it spread out over several.

Of course, Howard has next to zero credibility any more since this whole store building strategy blew up in his face and it's become clear he and Jim were managing the business for Wall Street, not the regular street.

[Stan]

I was out and about around 1 pm and stopped by a high traffic Fort Worth, TX Starbucks #09848 and requested a bold drip. They said they could only offer a French press and could not brew a bold drip after noon per company policy.

My wife and I used to spend around $200 a month at Starbucks for ourselves and taking our grown kids Starbucks when we dropped by. Now we only spend around $20.

The drop in spending on our part is not due to the economy, price of gas, etc. but due to the only drip coffee available during the majority of store hours is just PPR drip.

[whatev]

Starbucks will not recover. The economy is the ruler and this niche retailer foodservice concept is finding out that it needs to stay a niche player to remain in business.

Pepsico to the rescue.

[josh]

Stan,
there IS NO company policy that forbids the brewing of bold coffee after noon. they are just lazy...in fact, they are part of the problem when it comes to making starbucks a better place.
come to my store here in california. we do brew pike place all day but we also have bold coffee ready if a customer wants it. it can be ground and brewed fresh in around 5 minutes...and most of the people who specifically ask for it (and realize we can make it for them) don't mind the wait.
i want my customers to be happy with the $4+ dollars they might be spending at my store. i will do whatever i can to make their experience a positive one...and if that means i need to grind, brew and serve them a tall sumatra at 5pm i'll do it.
i love my job and i will do all that i can to try an negate the poor "baristas" that fill many of our stores and the POOR job they do. no offense...just tired of hearing the same stories over and over about BAD customer service in our stores.

[Melody]

Stan,
I echo what Josh says. That makes me sad to hear. Complain complain. Please. It's the only way Starbucks will know where they've broken down along the side of the road ...
Melody

[bucksguy]

Oh, for Pete's sake (pun not intended, but seems to fit) the policy clearly states to ONLY brew the 'morning pick'/ secondary / sometimes bold coffee until noon. Of course we will always just say yes and prepare a press after that time, however most customers decline it. If you are brewing a secondary all day - you are part of the problem related to COSTS. Hellllllo!!! We are in trouble, in case you haven't noticed. It's not okay to keep dumping product down the drain. Do you want your options to remain worthless????? Do you want your store to close and you and your fellow partners to be out of jobs? There has to be a balance between providing the amazing and great atmosphere we always have AND being able to run a successful business. We can't keep giving away the store and, literally, throwing product away. And, for the record, the customers are right- PPR is awful! We, the partners, would love to continue to provide you with the interesting variety SBUX has always been known for. Chalk it up to "TRANSFORMATION" Isn't it lovely?

[Stan]

Follow up:

Dropped by the Fort Worth, TX Starbucks #09848 around 2:30 pm. Requested a bold drip and they brewed Komodo Dragon.

That is great!!! I may have to start going to Starbucks again.

[josh]

the policy states that we are supposed to brew pike place all day. the policy DOES NOT forbid the brewing of bold at other times besides before noon. think outside of the box...do you honestly believe that your DM or Manager will fire you for "wasting coffee" if a customer wants a bold coffee and you have the full ability to make their request a reality? we brew espresso roast much of the time because we always have it and i happen to think it tastes great brewed. that is a bold roast every store in the US has ALL THE TIME. if the customer is truly your focus you would brew them bold...because you know you have it in the store, even if it is espresso roast. i don't believe that brewing bold goes against any "policy" starbucks has. i wouldn't brew it all day or all the time. but upon request i don't see how this could ever be a problem. the customer comes first.

[Scot Phelps]

OK,
If I ask for a bold venti after noon, I've been told by partners that the french press costs $4 something (vs $2 for a regular venti coffee.) How is this acceptable to double the price and make me wait 5 additional minutes for something that used to be standard?

That is why I am no longer a daily customer.

BTW- I have also been to business district stores that didn't brew any bold AT ALL on weekends, and I was told "it is too slow, so we only brew ppr."

Are we all clear why the stock price is in freefall?

[Mike]

How can ANYONE call Starbucks good coffee. For one, it's use of super-automatic machines (except for Pike Place Market in Seattle-the original store full of snobs) assure only a mediocre cup at best...and their use of PODS makes it an abomination calling itself a coffee house. Monkeys could make that stuff. That and they let their brewed coffee sit all day long getting old, they re-use milk (changing the sugars in it) and can't steam a proper latte to save their lives.

Anyone drinkng 5 VENTI's a day as reported here really can't call themselves a coffee connesseur...just a caffiene addict with no taste buds. Good things come in small doses...like a nice HAND TAMPED ristretto shot or two...or maybe a true latte made by hand and topped with latte art.

NOBODY at Starbucks can do that. PHHHHTTTPPP!!! YUCK.

[Stan999]

Starbucks is no longer viewed by investors as one of the favored growth stocks. While their stock may go up it will never return to the P/E ratio it enjoyed in the past.