Starbucks said last night it was the latest victim of the US mortgage meltdown.
Blaming hard-hit housing markets of California and Florida for slowing sales, the coffee shop chain slashed its quarterly and 2008 profit forecast below Wall Street targets and said it faced the "weakest economic environment" in its history.
Starbucks had opened 14 stores in Ireland by the end of 2007.
The company's shares tumbled 12 per cent on the news, which came four months after company founder Howard Schultz returned as chief executive with a mandate to turn around the struggling US business.
Starbucks long considered itself virtually immune to economic swings, but has admitted in recent months that some consumers have avoided its premium coffee as the economy soured.
Schultz said in a statement that "the current economic environment is the weakest in our company's history, marked by lower home values, and rising costs for energy, food and other products that are directly impacting our customers."
Fewer customers at US stores triggered a mid-single-digit decline in sales at established stores, called comparable store sales.
California and Florida markets, which account for about one-third of its US retail revenue, have been hard hit by the downturn in the US housing market, it added.
As a result, Starbucks reported preliminary second-quarter earnings of 15 cents per share, behind Wall Street analysts' average target of 21 cents per share, according to Reuters Estimates.
Starbucks estimated that costs associated with turnaround efforts and store closures lowered earnings by 3 cents per share in the second quarter, which ended March 30th.
Given the continued weakness in the US economy, Starbucks warned that fiscal 2008 earnings per share would be "somewhat lower" than the 87 cents it reported in fiscal 2007, while analysts were looking for a profit of 97 cents per share for the current fiscal year.