Coffee giant Starbucks announced its first ever quarterly loss yesterday but still saw its shares rise after its earlier announcement of a major management reshuffle and cost-cutting impressed investors. (See: Starbucks announces major management reshuffle, to cut 1,000 jobs)
Announcements that Starbucks would emphatically reverse its expansion policy by closing more US stores than it would open next fiscal year sent the stock soaring almost 5 per cent in after-hours trading yesterday.
In spite of its first reported loss since going public in 1992, the news was encouraging for investors who have decried the oversupply of Starbucks stores in every American neighbourhood.
Starbucks reported a fiscal third-quarter net loss of $6.7 million, 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. Total revenue rose 9.1 per cent to $2.6 billion from $2.4 billion.
Excluding the $168 million charges related to closing US stores, Starbucks had a per-share profit of 16 cents, lagging the 18 cents average estimated by Wall Street analysts.
Fighting talk from Schultz about the future direction of the company and the fact it kept its guidance for 2009 impressed investors. For fiscal 2009 Starbucks held firm to its previous profit forecast of between 90 cents to $1 per share.
Consequently, Starbucks shares rose to $15.36 from their NASDAQ close of $14.67. Over the last year, Starbucks shares have lost more than 45 per cent of their value.
Schultz, who re-took the CEO spot in January, was upbeat about the company's "transformation agenda". He said the company is making "bold moves to transform our business for the longer term while riding this extremely challenging economic environment".
The moves include enhanced promotion of its customer loyalty card and a "new food platform" which will include the revamping of its breakfast sandwiches.