More Grounds for Pessimism at Starbucks

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,...