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Starbucks Gets Burned on Earnings

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Starbucks shares were down 4.8% in after hours trading after it missed revenue estimates, as reported by Seeking Alpha. Revenue was at $4.3 billion, 50 million below Wall Street estimates. EPS was $0.74, which was in-line. Management said it expects 16-18% in revenue growth.

The reason for the softness, as CEO Howard Schultz said, was a “non-existent” back to school business uptick. Starbucks usually sees an increase in traffic during that period, and this year, it didn’t happen. Starbucks is also levered to retail. When retail is weak, Starbucks  also tends to stumble, since many people visit Starbucks on shopping trips, and a decrease in mall traffic also affects Starbucks.

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