Starbucks Corp's earnings estimates were reduced by two analysts after the largest US specialty-coffee retailer's June sales missed forecasts. The company's shares fell 6.6 percent.
Merrill Lynch & Co's Scott Waltmann shaved a penny off his profit forecast for this year, bringing it to US$0.46. Lehman Brothers analyst Mitchell Speiser cut his estimate US$0.02, to US$0.56. Starbucks earned US$0.35 in the year ended Oct. 1, excluding non-cash investment losses.
Sales rose 19 percent to US$259 million last month, Starbucks said yesterday. The company had forecast sales to increase 20 percent to 25 percent each month in the second half, analysts said.
It was the third straight month of shortfalls, suggesting new stores aren't doing as well as expected and sales to businesses also are slow, analysts said.
"If it was one or two months, it would be one thing, but when it's three months, it starts to raise red flags," said Waltmann, who reduced his rating on Starbucks to near-term "neutral" from near-term "accumulate."
"You have to question what factors they are looking at to drive revenue growth."
Shares of Starbucks fell US$1.44 to US$20.48. The stock has declined 7.4 percent this year.
Starbucks's sales are getting hurt by a slowdown in consumer spending and job cuts across the country that are making consumers more wary of spending, analysts said. At such a time, Starbucks has less flexibility to raise prices to improve profit, they said.
The company in August raised coffee-drink prices US$0.05 to US$0.10.
Sales at company-owned stores open at least a year rose 3 percent in June, Seattle-based Starbucks said. So-called same-store sales are an important retail measure because they exclude new or closed locations.
Analysts surveyed by First Call/Thomson Financial forecast Starbucks will earn US$0.46 this fiscal year and US$0.57 a share next year.
Waltmann cut his estimate for next year by a penny, to US$0.57.
Starbucks has more than 4,400 locations in North America, Europe, the Middle East and Asia. The most rapid expansion for the chain is in Australia, while it plans its first oulet in Austria this year.
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