Starbucks Scales Back US Expansion

  1. http://www.nytimes.com/2008/01/30/business/30cnd-sbux.html?_r=1&ex=1359435600&en=5589c5121f42b802&ei=5088&partner=rssnyt&emc=rss&oref=slogin

    Guess coffee is one of the first things people cut back on!!!

    ****Story Below****

    As it begins a major turnaround effort, Starbucks on Wednesday announced a slight gain in quarterly profits and a significant slowdown in the rate of growth in the United States as it seeks to recapture its former glory.

    Howard D. Schultz, the chairman and chief executive, said in a statement that he would close 100 underperforming stores in the United States as part of a major restructuring, though he did not identify the locations.

    Starbucks plans to open 1,175 new stores in the United States in the coming year, down from an earlier goal of 1,600 new stores. “By reducing the number of openings, we expect to optimize our resources and potentially reduce cannibalization of our existing stores,” he said in the statement.

    At the same time, the company raised the number of international stores that it plans to open to 975, from 900, as business overseas remains robust.

    What remains unclear is how Mr. Schultz will recapture the cachet that made Starbucks a customer favorite and Wall Street darling. In a memorandum that was leaked last February, Mr. Schultz bemoaned the “commoditization” of the Starbucks experience.

    On Wednesday, he said many of those details, “including bold innovations that will reassert our coffee leadership, redefine the in-store experience and introduce core brand-building initiatives” will not be announced until Starbucks’ annual meeting in March.

    He did reveal one detail about store operations, though, saying that Starbucks would get rid of hot breakfast sandwiches because they interfere with the smell of coffee.

    In the first three months of its budget year, Starbucks reported earnings of $208 million, a 2 percent increase over the same period a year earlier. Comparable store sales, a standard measure of retail growth, grew 1 percent in the quarter, an anemic number for a company that once routinely posted much stronger growth.

    Mr. Schultz, who served as chief executive from 1987 to 2000 and is widely credited with Starbucks’ success, was brought back as chief executive earlier this month to try to restore the company’s luster.

    Wednesday’s announcement came after the closing bell on Wall Street. Starbucks’ shares, which ended the regular session down 75 cents, or 3.8 percent, at $19.22, fell a further 1.5 percent in after-hours trading.
     
  2. I'm not surprised by this news.....it seems as though they have been opening stores on every corner practically.


    AJ
     
  3. Its a good thing too. People want to go to a store where the barsita knows you and your drink. If you give people too many places to go it cheapens the brand and makes it too MCdonaldsy. (BTW i have worked for starbucks for 6 years)