Starbucks Reports Same-Store Sales Down 8%

Decrease Is Improvement Over Previous Quarter; Touts Strong Sales of Via Instant-Coffee Product

Published: April 29, 2009

CHICAGO (AdAge.com) -- Starbucks promised new marketing, expanded value offerings and more cost savings to dig itself out of a financial morass. The company reported second-quarter earnings down 77%, primarily due to restructuring charges, and same-store sales down 8%. While the year-over-year decline in traffic is significant, it's a slight improvement from last quarter's 9% same-store sales decrease, which was a 10% decrease in the U.S.

CEO Howard Schultz cautioned that it's too early to call the slight improvement a trend. "The global economy continues to be weak," he said, "and we're conservative in our view of any significant recovery in '09, particularly in light of rising unemployment, foreclosures and other key economic indicators."

The call wasn't entirely devoid of good news, however. Via, Starbucks' "superpremium" entry into the instant-coffee market, is ahead of expectations in all channels. Starbucks, as first reported by Ad Age, began testing the product in company stores in Seattle, Chicago and London last month. The test expanded to include Target, Costco and some Barnes & Noble stores in U.S. markets earlier this month and, later, Britain's Easy Jet airline. Not only are the products selling, but repeat customers are trading up from packs of three to packs of 12.