Chief Financial Officer Troy Alstead said U.S. same-store sales have dropped 9 percent since Starbucks' fiscal first quarter began at the end of September.
NEW YORK — Starbucks warned Wall Street on Thursday that its profit for the current quarter would fall short of analysts’ expectations during a conference that began with Chief Executive Howard Schultz trying to assuage concerns about the recession’s effect on the coffee retailer.
Chief Financial Officer Troy Alstead said U.S. same-store sales have dropped 9 percent since Starbucks’ fiscal first quarter began at the end of September.
Investors had hoped the 8 percent decline in U.S. sales Starbucks reported for its fourth quarter, compared with a year earlier, would be the company’s worst drop.
Sales have been particularly dismal in states hardest hit by foreclosures, most notably California and Florida, which together make up about 30 percent of the company’s store base.
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“We were not immune to the deepening impact” of the economic crisis, said Alstead, adding it was too early to say how sales for the quarter would end.
The comments came during an analyst conference in which Schultz tried to curb Wall Street’s anxiety about the chain’s recent sliding sales and profits. Starbucks shares slipped 3 cents to close at $8.61 Thursday.
Schultz told analysts the company would emerge stronger, leaner and more socially conscious once it had endured an environment in which consumers are no longer as willing to spend on small luxuries like $4 lattes.
He said Starbucks could not drastically change its identity or its brand to make its way through a period of falling consumer confidence.
“This is not the time, after 30-plus years, after building one of the most recognized brands in the world, to throw the baby out with the bath water,” he said.
Although most consumers have been demanding value, Schultz said Starbucks cannot destroy its identity as a premium brand and must offer value through that “lens.”
To keep its premium positioning intact while giving customers a deal, Starbucks has been offering loyalty cards that give registered customers discounts and giveaways.
The company also has begun offering gift cards at a discount through Costco Wholesale.
Starbucks’ cost-cutting campaign has included the closure of more than 600 underperforming stores in the U.S and 61 in Australia and the elimination of more than 1,000 jobs.
It said it expects to see cost savings of about $200 million to $210 million in fiscal 2009 from initiatives already under way, and it has identified another estimated $200 million in savings that could come from cutting labor costs or streamlining distribution.
The company didn’t rule out closing more stores, both in the U.S. and internationally. But any closures likely would not be on the same scale as the 600 announced this summer, executives said.