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Los Angeles Starbucks Corp. said on Wednesday it would slash store openings through 2011 as it adjusts to slower U.S. growth and turns its focus to expanding newer international markets, according to a Reuters report.
The company, which warned last week of the worst economic environment in its history, blamed the domestic housing crisis for a significant quarter-over-quarter deterioration in U.S. customer traffic and said it saw early signs of a potential traffic slowdown in the United Kingdom, which may be related to economic problems there, the report said.
Chief Executive Howard Schultz, brought back in January to lead a turnaround of the company, continued to dismiss fears that Starbucks was overbuilt or that new competitors like McDonald's Corp. were stealing customers.
The U.S. mortgage meltdown has left customers with less to spend, he argued.
"We strongly believe it is not the competition ... We don't believe that we've saturated the market, but we do believe that we have a head wind the likes of which we've never seen," Schultz told analysts in a conference call.
On Wednesday, the chain posted fiscal second-quarter net income of $108.7 million compared with $150.8 million a year earlier.
Total revenue rose a smaller-than-expected 12% to $2.53 billion, after same-store sales at U.S. stores open at least 13 months fell in the mid-single digits.
Starbucks' U.S. stores delivered 77% of total revenue and experienced slower traffic during the quarter.