Starbucks (SBUX) Sinks On Lower Q2 Guidance; Co Blames Weak Consumer

Shares of Starbucks (Nasdaq: SBUX) are over 12% lower in after-hours action Wednesday after cutting Q2 guidance, citing economic pressures and transformation expenses.

Starbucks said it now expects revenues to increase 12 percent from last year's Q2 and sees EPS of $0.15. The EPS consensus is $0.21.

The company said costs associated with the implementation of its transformation agenda and charges related to the rationalization of its store portfolio will negatively impact earnings by $0.03 per share.

CEO Howard Schultz said, "The current economic environment is the weakest in our company's history, marked by lower home values, and rising costs for energy, food and other products that are directly impacting our customers." The company noted mid-single-digit decline in U.S. comparable store sales, driven by decreased traffic.

Despite the lousy news, CEO Schultz is optimistic about his return and his new customer-focused initiatives, including the new coffee Pike Place Roast. Schultz said while customers are coming to their stores less, they are not going to competitors to substitute their 'Starbucks Experience'. [LJ]

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