First drop in visits trips up Starbucks

Starbucks Corp. lowered its profit and sales forecast Thursday after reporting its first decline in U.S. customer visits ever. Its shares fell 9% in after-hours trading.

The profit revision suggests Starbucks is losing customers to McDonald’s Corp. and Dunkin’ Donuts, where a cup of coffee may cost $1 less.

“Starbucks is saying what the rest of the U.S. is saying, that the consumer is getting hit,” said James Walsh of Coldstream Capital Management. “They’re not immune.”

Starbucks’ fiscal fourth-quarter net income advanced to $158.5 million, or 21 cents a share, from $117.3 million, or 15 cents, a year earlier, the Seattle-based company said. The results matched analysts’ estimates. Revenue climbed 22% to $2.44 billion.

Earnings per share next year will be $1.02 to $1.05, a gain of at most 21% and less than its previous forecast of a 22% increase, Starbucks said. Analysts were anticipating profit of $1.05 a share.

Starbucks shares fell $2.16 to $21.94 after the results were released. The shares had dropped 15 cents to $24.10 in regular trading.

The stock has declined 32% this year on investor concern that sales at stores open at least 13 months may slow as the company tries to reach its goal of 40,000 locations worldwide.

Revenue for the 12 months that end in September 2008 will rise by 17% to 18%, below the company’s previous forecast of a gain of “around 18%,” Starbucks said. Same-store sales are expected to increase in the range of 3% to 5%, lower than its long-term target of a 3% to 7% gain.

Sales at stores open at least 13 months rose 4% for the fourth quarter. Analysts surveyed by Bloomberg had a median same-store-sales estimate of 4.5%. U.S. customer transactions fell 1%, Starbucks said.

In late July, Starbucks lifted prices by about 2.5%, or 9 cents a cup, to cover rising costs for dairy, coffee, wages and benefits. It was the second increase in less than a year.