Starbucks shares continue to fall

Starbucks shares sank to a 52-week low Monday and are flirting with a five-year low as investors continue to digest last week's news that the company will close 600 of its least profitable U.S. stores.

The stock dropped 61 cents, or 3.9 percent, to $14.95. The overall Nasdaq market fell just 0.09 percent.

It is the first time Starbucks has traded below $15 since late 2003, when it had 7,225 stores worldwide. Now it has more than 16,225 shops, including more than 11,400 in the U.S.

"That's a surprising move down, because it's not like it rallied very strongly on the store closure [announcement]," said James Walsh, an analyst at Coldstream Capital Management in Bellevue, whose clients' portfolios include more than $1 million of Starbucks stock.

"The market is being hostile to discretionary-spending stocks, because there's no relief in sight for the housing downturn and gas prices," Walsh said.

Suzanne Price, an analyst at ThinkPanmure in San Francisco, said several consumer stocks she watches were hit Monday, including Chipotle Mexican Grill, which fell 2.8 percent to $78.51, and cosmetics company Bare Escentuals, which lost 4.2 percent to $16.95.

"It's just negative consumer news right now, even though nothing new specifically came out today."

Starbucks has lost favor, because "investors are thinking this is not a growth story anymore. ... The question is how quickly can the company turn around and start growing profitably again," she said.

Jack Russo, an analyst at Edward Jones in St. Louis, said some portfolio managers might have waited until after the holiday weekend to sell. Volume Monday was 18.2 million shares, above Starbucks' daily average of 14.6 million shares.

"Some people are probably thinking the store-closing numbers are much greater than expected, and obviously there's an underlying reason for that," Russo said.

"It's probably tied to sales and sales trends, and some folks are thinking the sales numbers we're going to see when they report at the end of the month are going to be worse than expected."

Starbucks reports fiscal third-quarter earnings July 30.

"The economy's pretty tough right now for a lot of folks, not just these guys, and they overbuilt," Russo said. "I think they will get it right, but it's going to take time."

Melissa Allison: 206-464-3312 or mallison@seattletimes.com