Starbucks last night said that for the first quarter in its history, the number of visits to its established US stores fell as economic worries and two recent price hikes spooked customers, sending shares nearly 9 per cent lower.
Starbucks also reported a 35 per cent rise in fourth-quarter earnings, helped by higher prices and its rapid store growth, but forecast 2008 earnings below many Wall Street estimates. In addition, it said 2008 sales at stores open at least 13 months would be at the low end of its long-term targeted range.
"We're seeing this pushback that other retailers have described," chief executive Jim Donald said in an interview, adding that a July price increase of about 9 cents a cup had hurt traffic. That move came less than a year after the company's previous price hike.
Starbucks also said that next year it would open about 100 fewer stores in the United States than originally planned.
After years of saying its perpetually growing number of stores was resistant to blips in the US economy, Starbucks in recent months has tempered that message as customers have cut back on visits to the chain.
The company has also been hit by soaring prices on milk and stepped-up competition from rivals such as McDonald's, which has been expanding its coffee offerings.
Donald, however, said he would not link the heightened competition to the weak store traffic. Worldwide, same-store sales rose 4 percent during the quarter, helped by higher prices.
In the United States, Starbucks' biggest market, same-store sales also rose 4 per cent - but traffic was down 1 per cent.