STOCK QUOTES     More market data...

Starbucks' sales cool off stock

By Monica Soto Ouchi
Seattle Times retail reporter

E-mail this article Print this article Search archive Most read articles Most e-mailed articles

Wall Street yesterday pushed the specialty coffee giant's shares down 6.5 percent — a day after the company said its monthly sales growth slipped in August for stores open at least a year.

With the company's stock trading at 48 times its estimated full-year earnings, analysts say any less-than-eye-popping results make the stock seem expensive.

"(Wall Street) had built up the stock price so much in the last couple of months," said Standard & Poor's equity analyst Dennis Milton, who expected same-store sales growth of 8 percent and has a hold rating on the stock. "It's just retracing where it was."

Late Wednesday, the company said August same-store sales — a key retail gauge of stores open at least a year — rose 8 percent when compared with a year earlier.

While that exceeded the company's forecasted monthly growth rate of between 3 and 7 percent, it represented the slowest monthly boost since May 2003 and was the first time it dropped below double-digit growth in nine months.

Since November, the company has reported monthly sales growth in the range of 10 to 13 percent.

Milton said investors sometimes expect a little too much.

"I would caution more investors not to be too obsessive over one month of sales," he said. "It's interesting to look at, but it's not always the best gauge."

Starbucks reported $418 million in sales for the four weeks ended Aug. 22, a 25 percent increase from the year-ago period.

It added 90 stores in August, bringing its worldwide store count to 8,337.
 
The company said last month that it would most likely raise drink prices at its North American stores next fiscal year to keep up with costs. It hasn't said when, but the increase would be the first for the company in nearly four years.

Starbucks' shares closed down yesterday $2.97 to $43.07. Its stock is up 29.9 percent for the year.

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com