The expectations for Starbucks (SBUX) were very low. That probably has not been true since the company went public.

But, Starbucks was able to come in below a worst case, the hallmark of a number of years of management fumbles and over-expansion.

Consolidated net revenues increased 9 percent to $2.6 billion for the third quarter of 2008, compared to $2.4 billion for the third quarter of 2007. Earnings per share (EPS) for the quarter was $(0.01), compared to EPS of $0.21 per share earned in the prior year period. The company estimates that costs associated with the ongoing implementation of its transformation agenda impacted third quarter 2008 EPS by approximately $0.17 per share.

For the 13-week period ended June 29, 2008, Starbucks reported a net loss of $6.7 million compared to net income of $158.3 million for the same period a year ago.

The company’s forecasts were even more disappointing. Starbucks anticipates total net revenue growth of approximately 11 percent in fiscal year 2008. These targets reflect the company’s current assumption that fourth quarter company-operated comparable store sales trends will remain relatively stable with the third quarter.

The market was more than satisfied, moving the shares up about 5%, which says a lot about what Wall St. thinks of the future of the company.

Douglas A. McIntyre

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