Starbucks warns it may miss target

NEW YORK – Starbucks warned Wall Street on Thursday that its profit would fall short of analysts’ expectations this quarter 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 same-store sales have deteriorated 9 percent in the U.S. since the company’s fiscal first quarter began at the end of September.

Investors had hoped the 8 percent decline in U.S. sales that Starbucks reported for its fourth quarter compared with the same period a year earlier would be the company’s worst drop.

Sales have been particularly dismal in those states that have been hardest hit by foreclosures, most notably California and Florida, which together make up about 30 percent of the company’s store base.

“We were not immune to the deepening impact” of the economic crisis, said Alstead, who said it was too early to say how sales for the quarter would end.

The comments came during an analyst conference in which Schultz attempted to curb anxiety on Wall Street about the chain’s recent sliding sales and profits.

Starbucks shares were up 2.8 percent, or 24 cents, at $8.88 in afternoon trading. They had traded as high as $9.41 earlier in the day.

Schultz had told analysts that the company would emerge a stronger, leaner and more socially conscious company, once it had endured an environment in which consumers are no longer as willing to spend on small luxuries like $4 lattes.

He said he is confident “when, not if, this environment does get better, that Starbucks is going to be a stronger company for having gone through it.”

With sales at established locations declining and profit sliding, the company is in the midst of a cost-cutting campaign that 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.