Signs of a slowing economy

Hello,

I read the
following e-mail below and felt that although this article may appear at first
glance to have little significance, in actual fact it does. The article reflects
that people are watching their spending which can have a negative affect on
corporate earnings.  In this case Starbucks has become a victim of the recent
economic slowdown.

 

Starbucks
posts first quarterly loss ever

Wednesday, July 30, 2008

LOS ANGELES — — Starbucks Corp. Wednesday posted its first quarterly net loss
since it went public in 1992, as it booked charges related to closing stores and
turning around its business.

The coffee chain, which has slashed U.S. growth plans and is closing 600
stores in the United States and 61 in Australia, reported a fiscal third-quarter
net loss of $6.7-million (U.S.), or 1 cent per share, compared with a
year-earlier net profit of $158.3-million, or 21 cents per share.

Results from the most recent quarter included 17 cents in charges primarily
related to store closures and restructuring.

Community Talk

Re: Signs of a slowing economy

Haha, there are plenty of food-conglomerate companies that sell cheap coffee but I doubt that one product line would serve as a catalyst.

Re: Signs of a slowing economy

Good point. Probably the household coffee bags will increase in sales. They cost about as much as two cups of coffee at Starbucks.

Know any household coffee bag selling stocks? lol

Re: Signs of a slowing economy

I think you're probably correct. Although I'm not sure how elastic the price of coffee is. I bet regular coffee sales will increase while the gourmet (more expensive drinks) will go down.