So I saw the earnings of Starbucks and thought, “really? That well? Really?”

And I dug into the earnings transcript and found something that made me think otherwise.

Favorable commodity costs and sales leverage in relation to our occupancy costs have also contributed to the improvement.

Moving now to results in our international segment. International total net revenues increased 19% to $591 million in the first quarter of fiscal 2010 driven by favorable foreign currency translation, the acquisition of the France market and positive comparable store sales of 4%. The comp growth was driven by a 4% increase in traffic while the average value per transaction remained flat compared to last year.

Ok, that may be the case, but what are you assuming?

With respect to commodities and foreign currency we except the balance of the year to be flat compared to last year with unfavorable dairy costs offset by favorable coffee costs and foreign currency. This compares to a favorable impact of roughly $0.01 in the first quarter driven by both commodities and foreign exchange.

Ok so dairy will be unfavorable, but coffee and foreign currency will be favorable? Really? Look around and smell the coffee [wink, grin]. Coffee has gone up, and the USD is going up. It is not going to be favorable for you, unless the USD decides to change direction.

Thus these are two red flags for me, and it makes me wonder what else is a red flag at Star Bucks…