When Howard Schultz returned to Starbucks promising headline-grabbing changes, posting the company's first-ever quarterly loss was probably not the type of transformation he had in mind.

But on Wednesday, for the first time in the Seattle-based coffee chain's 16-year history, it announced a loss of 1 cent per share. Although that number includes 17 cents per share in write-downs related to restructuring, even excluding those items, the company still fell short of the 18 cents analysts were expecting.  

Plagued by overexpansion followed by sluggish consumer spending and rising commodities costs, Starbucks has spent the first part of 2008 pitching an uphill battle to regain its footing.  

On an earnings call Wednesday evening, Schultz described his "unwavering confidence" in Starbucks' strength and resilience, describing the chain as "battling a perfect storm" in the economy.

"We're playing both offense and defense in our approach to the current business," said Schultz.

He couldn't be more right.

Schultz started off 2008 trying to score touchdowns. He instituted better employee training and unveiled state-of-the-art coffee machines. He gave Starbucks a loyalty program. Most visibly, Schultz launched shiny new products such as the Pike Place Roast coffee blend and Vivanno smoothies, and introduced a frozen drink called the Sorbetto to the L.A. market.

Since he reclaimed the reigns as C.E.O. in January, Schultz has been preaching plans of "realigning the Starbucks organization and streamlining the management"—a euphemism that hints that the corporate turnaround won't be all sunshine and banana-chocolate smoothies.

If the first sixth months of this year were all about offense, as if on cue, on July 1 Schultz waved the defense onto the field.

On that day Starbucks announced 600 U.S. stores would be on the chopping block. Yesterday, the company followed that by saying that 1,000 management positions would be eliminated, and 61 Australian stores (70 percent of its presence) are set to close. Schultz has also moved operations expert Martin Coles back into his role as the company's president.

Wednesday's results make it clear that there's a long road ahead for Starbucks. The company was $6.7 million in the red for its third quarter, compared with $158.3 million profit a year earlier; for the third straight quarter U.S. same-store sales have declined.

The coffee chain also revised its 2008 earnings outlook to the "mid-70-cent range" on revenue growth of about 11 percent. Earlier this year, Starbucks projected 2008 per-share earnings "somewhat lower" than 87 cents, on revenue up 13 percent to 14 percent.

On the bright side, once the 600 stores close, same-store sales are almost certain to point upward.