Starbucks Not Doing Well in Europe

Thanks to the global downturn, Starbucks is seeing sales sag

Despite rumors of expansion to Italy and globally, Starbucks isn't doing so hot in Europe. Much like the rest of the Eurozone, Starbucks is struggling "more than expected" in the region, due to economic woes and operating problems in stores.

Chief Financial Officer Troy Alstead said to NASDAQ that the company had to reduce its annual earnings report by 2 cents per share to reflect the downturn. It's partly because of the current economic climate, but also due to locations opened in struggling countries (like the UK), and poor operating efficiency, such as cost management and supply chains, in stores. To combat sagging sales, Alstead said the company is putting more pressure on stores in Europe, the Middle East, and Asia.

But another problem continues to hurt Starbucks that expands larger than Europe's economic problems: the price of coffee. CNN Money reports that the price of coffee surged 35 percent during the first few months of 2011; those prices are locked in for the remainder of the fiscal year.

But there is good news on the horizon: To solve the problem, Starbucks has sent comeback queen Michelle Glass to spearhead a solution. Glass had a big hand in helping the US comeback a few years ago, the Wall Street Journal reports. Furthermore, coffee prices have  decreased since January, and American and Asian stores are picking up the slack from poor European sales. Starbucks said they expect a stronger fiscal year in 2013.