from: www.minyanville.com
Starbucks (SBUX):
The one-time high-flying seemingly indestructible coffee chain that sports those insanely delicious (and addictive, I might add) “fraps,” was out with its second-quarter earnings last night after the bell.At first blush, they looked like a train wreck. Revenues came in at a little over $2.3 billion, which was down from the more than $2.5 billion it put up in the comparable period last year. And EPS came in at $0.03 versus $0.15 in the comparable period last year.
However, at the end of the day, there were a few tidbits of good news that I think deserve a mention.
1. Excluding items, it put up $0.16, which was (hallelujah) a penny better than expectations.
2. It's cutting costs, which I think a lot of folks wanted to see. In the release, it said : “In the second quarter of fiscal 2009, the company delivered $120 million in cost savings, exceeding the targeted $100 million for the second quarter, and resulting in year-to-date cost savings of approximately $195 million.”
3. There was also some upbeat information regarding free cash flow. The following line in the release caught my eye: “...as announced in March, Starbucks fiscal year 2009 cash from operations is expected to exceed $1 billion, with resulting free cash flow in excess of $500 million.”
4. It seems the company is adamant about changing the perception people have of it. Reuters quotes its chief executive on a call as saying: “Starbucks coffee does not cost $4.” I think this is smart, and will make it better able to compete with the likes of Dunkin' Donuts and McDonald's (MCD).
But will this be enough to really draw in investors? The jury's still out. I have this sense that the tide is starting to turn at Starbucks, but I’m cautiously optimistic. Note that its comp-store sales were off a stomach-churning 8%, which isn’t something to write home about
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