Starbucks has responded to a decision by Moody’s to downgrade the company’ s credit ratings, saying it was in a very solid financial position.
The coffee shop chain issued a statement after Moody’s Investors Service lowered its rating on Starbuck’s $550m (£364.2m) senior unsecured notes to just above “junk”, cutting it to “Baa3” from “Baa2”.
In a statement, Troy Alstead, the company's chief financial officer, said: “We are ahead of target with our initiatives to position the company for sustainable, profitable growth, and the results of those efforts are reflected in Starbucks second-quarter financial performance.
“Finally, despite the difficult consumer environment, Starbucks second quarter non-GAAP earnings exceeded the first call consensus estimate.”
Moody’s said that the downgrade reflected the chain’s challenge of refocusing its business amid the recession without seriously damaging the brand.
It said that the company had materially overbuilt its store base throughout North America during the boom years and was now having to restructure to downsize the business and restore profitability.
The credit ratings agency also cited Starbucks’ weaker than expected operating performance and said that the continuing softening in consumer spending and increasing competition would limit the chain’s ability to improve sales soon.
