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Starbucks cautious on 2008, cuts store openings
Starbucks Corp (SBUX.O: Quote, Profile, Research) on Wednesday said it is slowing store openings in the U.S. as returning Chief Executive Howard Schultz warned that the American consumer is likely facing a recession, and its shares fell 2.5 percent.

The coffee chain has been battered in recent months by slower consumer spending, higher milk prices and concerns it may have saturated the U.S. market.

"There's a macroeconomic headwind that we're all facing that strongly suggests that the consumer is in a recession," Schultz said in a telephone interview.

Starbucks cut its forecast for new U.S. store openings to 1,175 for fiscal 2008, from 1,600. This would include the closing of 100 underperforming stores in the U.S. Meanwhile, it plans to increase international store openings by 75 outlets to 975.

The coffee seller said it now expects earnings per share in fiscal 2008 to grow in the low double-digits by percentage. Starbucks' previous forecast was for earnings per share of between $1.02 and $1.05 in fiscal 2008, which would mark a 17 to 21 percent increase in earnings per share.

"The guidance looks conservative. That doesn't run counter to expectations. The expectation was that the guidance would come down a bit," said Dan Geiman, analyst at McAdams Wright Ragen.

Starbucks had fiscal first-quarter net income of $208.1 million, or 28 cents per share, compared with net income of $205.0 million, or 26 cents per share, in the year-ago quarter ended December. Consolidated net revenue rose 17 percent to $2.8 billion.

The result topped analysts' average call for a net profit of 27 cents per share and revenue of $2.76 billion, according to Reuters Estimates. It landed as Seattle-based Starbucks faces new competition from fast-food giant McDonald's Corp (MCD.N: Quote, Profile, Research), which is expanding its selection of coffee-based drinks.
http://www.reuters.com/article/pressReleasesMolt/idUSWNAS851720080130