Business

Starbucks hit by housing crisis
by Zuzana Zelenakova

Many people around the world cannot imagine a single day without a cup of coffee. And no coffeehouse chain company is as big or as popular as Starbucks based in the United States. For lot of Americans but also residents from other countries it is practically a daily ritual to stop at one of Starbucks stores on their way to work and have a cup of nice warm coffee. So it would seem unlikely that a company like this would get into trouble because of the current economic situation in the United States. But the truth is its profits are slumping these days as well as the share price which fell by 12 percent. The reason is ongoing housing crisis which had a negative impact mainly on California and Florida markets. It is bad news for these two represent one third of the company's US earnings. “The bottom line is people's pocketbooks are hurting and one of the first things they can cut out is $4 cup of coffee that they used to buy five times a week,” said John Langston, senior analyst at Hodges Capital Management. Well, it is only understandable that people eliminate such small purchases when we take into consideration how much they need to stimulate their savings right now. The company naturally expects drop in profits also in the fiscal quarterly results as well as in full-year profit forecast blaming the weak economic situation. “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,” said Chairman and Chief Executive Howard Schultz in a statement. He remains enthusiastic though and plans to bolster the company by new machines, new customer services, environmental engagements and so on.

related story: http://news.yahoo.com/s/nm/20080423/bs_nm/starbucks_outlook_dc;_ylt=AltbeC9k3dTzrUrpWoRcajSs0NUE

by Zuzana Zelenakova for PocketNews (http://pocketnews.tv)

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edited by Beata Biskova

Labels: Business, CantellTV, Chris Cantell, Christopher Cantell, digital broadcasting, SigEx Foundry, SigEx Telecom

posted by Blog TechSource @ 5:14 AM