Starbucks (SBUX) Q4 Profits Fall A-Latte

Shares of Starbucks (Nasdaq: SBUX) are off 3.5% today after reporting weak Q3 results after the close, missing analysts' estimates on earnings and revenues. Fourth quarter profits fell an astonishing 96%, as traffic at the coffee chain fell and customers spent less.

Starbucks reported Q4 non-GAAP EPS of $0.10, 3 cents lower than the analyst estimate of $0.13. Revenue for the quarter rose 3% to $2.5 billion, below the consensus of $2.58 billion. Restructuring charges totaled $99.2 million in the fourth quarter of fiscal 2008. Of that amount, $38.6 million was related to executing on the decision to close approximately 600 underperforming U.S. company-operated stores. The company said customer traffic counts fell 4% in Q4 and the average check fell 3%.

Starbucks did not providing specific quarterly EPS targets for fiscal 2009. For the year, Starbucks sees non-GAAP EPS somewhere between $0.71 and $0.90 depending on the level of decrease in consolidated comparable store sales, from a 3% decline to a 7% decline. Wall Street analysts, on average, had seen 2009 EPS of $0.87.

Starbucks 2009 U.S. store opening target is now approximately a negative 20 net new stores, which includes a nearly 225 company-operated store decline and approximately 205 net new licensed stores. Starbucks' CEO Howard Schultz also backed away from this goal of opening 40,000 stores.

Following the results a number of analysts maintained their negative stance of the share, which have fallen more than 50% over the past year.

Deutsche Bank said, "... we do not believe Starbucks company fundamentals have either re-based or transformed. We find management optimism misplaced and the fundamental consumer value proposition of premium coffee as the economy has slowed and consumers have changed is misunderstood." They maintained their Hold rating and cut their price target from $13 to $10.

Piper Jaffray said, "they remain cautious given the moderating top-line trends, which may adversely affect the strategic initiatives in place, pushing cost savings further into the future an therefore putting long-term earnings targets at risks" The firm maintained a Neutral rating and $14 price target.