Ouch. The New York Times reports (via AP) that Starbucks' fourth quarter profits dropped almost 100 percent, due largely to closing stores. But declining sales have to be a factor, too, as the subprime mortgage crisis and related macroeconomic woes find their way to the street. It's the trickle-down theory all over again: More bankers, and workers of every stripe, are out of work; borrowers need to save every cent to pay their mortgages; and premium coffee becomes just another luxury to cut from the daily budget.
Year to date, the share price is down also by over 50 percent, from a market high of $20 to less than $10 earlier this month. The company also reports that while overall revenue is up 3 percent, same-store sales are down 8 percent in the U.S. Here's the full company release, courtesy of Yahoo!
Starbucks closed its fourth quarter on Sept. 28; so its first quarter will next include the holiday season of gift cards, coffee mugs, and other low-cost presents during our present recession economy. I'm guess the company won't be selling as many CDs or $500 espresso machines. But how low do the denominations on a gift card go? None of your friends or family members will know you gave them only $5 worth of joe until the second time they use it.