Shares in Starbucks slumped after the café chain on Thursday stirred concerns about the health of the US economy when it reported its first quarterly fall in traffic at its US stores and announced plans for its first television advertising campaign.
The planned holiday season advertising comes as Starbucks acknowledged that its supposedly “recession proof” sales of frappuccinos and flavoured latte drinks were feeling the impact of broader slowdown in US consumer spending.
Shares in Starbucks fell 8.6 per cent at $22.02. The company’s shares are now down 38 per cent this year.
Announcing fourth-quarter results, Jim Donald, chief executive officer, said the company was “seeing this pushback that other retailers have described’’ and that a July price increase of about 9 cents a cup in the US had also hurt traffic.
In another indicator of consumer strain, two mainstream US retailers, JC Penney and Kohl’s, on Thursday blamed economic concerns for disappointing quarterly results, and lowered forecasts for the holiday quarter.
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