Starbucks Links Slowing Sales to Housing Downturn

Starbucks executives on Wednesday warned investors that sales are slowing and the company faces the weakest economic environment in its history. They blame the housing market. Sales were especially slow in California and Florida, which account for nearly one-third of the coffee chain's U.S. revenues.

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RENEE MONTAGNE, host:

NPR's business news starts with the Starbucks indicator.

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MONTAGNE: If you need any more proof that consumers are cutting back, go no further than Starbucks' earnings. The numbers aren't out until next week, but yesterday executives at the giant coffee chain warned investors that sales are slowing and the company faces the weakest economic environment in its history. They blame the housing market. Sales are especially slow in California and Florida. Those two states account for nearly a third of Starbucks U.S. revenues. They're also among the worst hit by the downturn.

Consumers seem to be foregoing their fix of fancy coffees. Analysts say they're getting their caffeine from cheaper places like convenience stores and McDonald's.

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