Starbucks: Even the Coffee Tastes Good at These Levels

4/24 - "The latest tidbit of gloom came in the form of Starbucks' revised outlook. Starbucks said it now expects second-quarter earnings to come in at $0.15 per share, versus $0.19 per share in the same period last year, and for revenue to increase by 12%...Even more shocking, Starbucks said earnings for all of 2008 are now expected to be "somewhat lower" than the $0.87 per share the company reported last year."

"Maybe American consumers have finally started doing the math on how much they can save by skipping the daily joe. Maybe the expenditure just isn't worth it anymore, with the cost of food and gas boring holes in their pocketbooks. And if that's the case, it wouldn't bode well for rivals such as Peet's (Nasdaq: PEET) and Caribou (Nasdaq: CBOU), either."

"However, while I recently called out Gap (NYSE: GPS) and Talbots (NYSE: TLB) as retail stocks to avoid, I'm not there yet with Starbucks. I still don't believe that its brand is busted...Still, as a shareholder, I'm not thrilled by the news...I realize that it's kind of hard to be patient when the coffee's left you with jangled nerves. Although I still believe the long term will contain plenty of caffeinated goodness from Starbucks, I suspect that the near-term pressures sure will make it tempting to switch to decaf."

4/24 - "I’ve been a big fan of Starbucks (SBUX) stock, saying to anybody who will listen that if I were allowed to buy a stock and put it on the shelf for a few years — buying more as it falls — Starbucks would certainly be one that I would consider.

Among the reasons: It’s a strong brand (and I like brands), Howard Schultz has his reputation at stake, coffee ain’t going out of style, McDonald’s (MCD) is limited as a competitor in terms of its coffee offerings and if ever there were a time to do a turnaround, it’s now — during a horrible economy — when the business would have done poorly, regardless. (And I didn’t even mention China.)"

4/24 - "As a result FY2009 earnings to be "somewhat lower" than the last year's 87 cents. Starbucks said it can't be more specific "due to the lack of visibility into near-term economic conditions." In January they projected earnings of 96 cents to 98 cents. Funny how they can be very specific when expecting an increase but when a decrease is in the cards, they just cannot finger it. Translation? It will be very bad..."

"The problem is that Starbucks has stopped giving people what they want. Schultz actually said people are "spending less" at his stores but "not going anywhere else".

DELUSIONAL..... Howard, you sell an addictive beverage that people cannot go without. If they are not getting it from you, they are getting it from someone else...I wish I had shorted this thing over 15 months ago when I first pointed out the problems killing it today."

4/24 - "CEO Howard Schultz said the "economic environment is the weakest in the companies history", and California stores are taking a big hit. They plan to close 100 stores and get back to basics, now they just need to close around 1,000 more."

"Best of luck if you are still holding SBUX shares, it's only going to get worse."