In This Article
30-Second Summary
Headline Link: ‘Starbucks To Close 600 U.S. Stores'
Background: Starbucks introduces new, customer-friendly features
Key Player: Howard Schultz
Opinion & Analysis: Is Starbucks a wise investment?
Reference: My Starbucks Idea
Related Topic: ‘Mom 'n' Pop Coffee Stores Take On Starbucks’
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Elise Amendola/AP
Starbucks To Shutter 600 Stores
July 02, 2008 01:28 PM
by
findingDulcinea Staff
The Seattle-based coffee chain may become slightly less ubiquitous as it plans to close hundreds of company-operated stores in the United States.
30-Second Summary
Starbucks stock rose 72 cents per share, or 4.6 percent, in extended trading after the announcement to shutter 600 stores in the next year. The company will still continue to open new stores, but not as many as once planned.
The company blamed the weak economy for the closings, but in the past analysts have often wondered whether the company's rapid U.S. expansion would become a problem as the market became saturated.
Company spokeswoman Valerie O'Neil said about 12,000 workers, or 7 percent of the global Starbucks workforce, would be affected by the measures, although it is not known how many jobs will be cut as opposed to moved to other stores.
Seventy percent of the stores slated to be closed opened after the beginning of 2006. Starbucks had been planning to open 400 new stores in fiscal year 2009, but on Tuesday cut that number to 200. There were 16,266 Starbucks stores around the world as of March.
Changes have been brewing for a while at the troubled coffee giant, whose shares have been falling steadily for the past two years.
In April, the brand brought back its original 1971 mermaid logo for eight weeks in an effort to revive warm feelings associated with the brand before it became beleaguered by bad press. Also this year, company founder Howard Schultz returned as chief executive.
The company blamed the weak economy for the closings, but in the past analysts have often wondered whether the company's rapid U.S. expansion would become a problem as the market became saturated.
Company spokeswoman Valerie O'Neil said about 12,000 workers, or 7 percent of the global Starbucks workforce, would be affected by the measures, although it is not known how many jobs will be cut as opposed to moved to other stores.
Seventy percent of the stores slated to be closed opened after the beginning of 2006. Starbucks had been planning to open 400 new stores in fiscal year 2009, but on Tuesday cut that number to 200. There were 16,266 Starbucks stores around the world as of March.
Changes have been brewing for a while at the troubled coffee giant, whose shares have been falling steadily for the past two years.
In April, the brand brought back its original 1971 mermaid logo for eight weeks in an effort to revive warm feelings associated with the brand before it became beleaguered by bad press. Also this year, company founder Howard Schultz returned as chief executive.
Headline Link: ‘Starbucks To Close 600 U.S. Stores'
Starbucks had originally planned to close just 100 stores, but later added 500 that had been on an internal watch list. Most of the stores were not profitable and were not expected to be profitable in the future, and many had opened near existing stores.
Source: The Orlando Sentinel
Background: Starbucks introduces new, customer-friendly features
The chain first revived its 1971 logo in 2006 to commemorate the chain’s 35th year in business. Some customers complained about the bare-chested logo, and the Starbucks mermaid “grew long hair to cover her indecency.”
Source: Business Week
With falling stock prices, the mood at this year’s Starbucks annual shareholders meeting was “less triumphant than in past years, with shareholders commiserating about their stock losses as they sipped lattes and munched pastries,” writes The Wall Street Journal. But CEO Howard Schultz said new espresso machines, customer loyalty cards and a new coffee blend could turn things around for the company.
Source: The Wall Street Journal (registration required)
Financial analysts reported that the new Starbucks features, particularly the loyalty cards and lower prices on food and drink combinations, may win back customers who are anxious to pay lower prices in today’s bleak economic climate. “Clearly the Starbucks Card is going to be an important component to getting people in the store and keeping them coming back,'' said Howard Penney, an analyst at Friedman Billings Ramsey in New York. “You want your most loyal customers to come back more often.''
Source: Bloomberg.com
Key Player: Howard Schultz
Starbucks founder Howard Schultz returned this year as the company’s CEO, a role he relinquished to Jim Donald in 2000. The company needs to boost sagging sales and stock prices; Starbucks share performance has dropped almost 50 percent in recent months.
Source: findingDulcinea
Opinion & Analysis: Is Starbucks a wise investment?
Todd Wenning at The Motley Fool questions whether Starbucks stock is a “value or value trap?” A few years ago, the market believed Starbucks could deliver outsized earning growth, but now things look “a lot grimmer,” he writes. “For one, Starbucks has lost most of its competitive advantages. In coffee quality, competitors such as Dunkin' Donuts, McDonald's (NYSE: MCD), Panera Bread (Nasdaq: PNRA), and even local coffeehouses have ramped up their quality and selection—often at lower prices.
Source: The Motley Fool
Reference: My Starbucks Idea
On Starbucks’ customer feedback Web site, coffee lovers are invited to log in, share suggestions and ideas, and vote on other people’s ideas.
Source: Mystarbucksidea.com
Related Topic: ‘Mom 'n' Pop Coffee Stores Take On Starbucks’
A Slate article arguing that the presence of a local Starbucks can boost business for independent coffee shops prompted disbelief and angry responses. Against expectations—and to the chagrin of the ubiquitous franchise—the appearance of a Starbucks increased demand among its competitors, writes Taylor Clark.
Source: findingDulcinea
© 2009 Dulcinea Media, Inc.
