Starbucks profits up, US traffic down

Why are less Americans going to Starbucks?   It is as simple as, prices go up, demand goes down or our preferences changing.

SEATTLE (AP) – Fewer coffee drinkers have been streaming into Starbucks Corp.’s U.S. stores—news that overshadowed an otherwise healthy fiscal fourth quarter for the world’s largest chain of coffee houses.

The 1 percent drop in traffic at stores open at least 13 months marked the first time the company has seen such a decline.

The company released its earnings report after the market closed Thursday. Starbucks shares fell more than 9 percent at the open of trading Friday, or $2.25, to $21.90.

While sticking to its ambitious goal of having 40,000 stores worldwide, Starbucks plans to open 100 fewer U.S. stores in fiscal 2008 than originally forecast, one of several moves aimed at improving operations.

Starbucks stock has fallen more than 40 percent over the past year, as the company has grappled with higher dairy costs, increased competition and economic woes that appear to have forced customers to pare back on their lattes and Frappuccinos.

Chief Executive Jim Donald dismissed suggestions that Starbucks might be oversaturating certain markets. He noted that even in its hometown of Seattle, it’s been experiencing steady success with new store openings.

Slowing the pace of U.S. store openings will help the company choose the right markets, he said.

“It gives us a little bit of breathing time to make sure that—maybe we don’t need that other store in Columbus, Ohio, but maybe there’s one extra one in Vermont that we could put up,” Donald told The Associated Press.

Starbucks opened 615 stores in the latest quarter and 2,571 in fiscal boosting its worldwide store count to 15,011. The company plans to open 2,500 stores in fiscal 2008, 1,600 of them in the United States.

Starbucks has stores in 42 countries outside the U.S. and said Thursday it would open its first store in Argentina in the second half of fiscal 2008.