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rffrydr
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rffrydr
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 Posted: Tue Nov 11, 2008 9:43 am Post subject: |
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| Quote: | SBUX Summary: Howard Needs Help
By Scott Rothbort
RealMoney Contributor
11/10/2008 8:45 PM EST
Wrap Up
Starbucks (SBUX - commentary - Cramer's Take) is still living in a world of "ethically sourced and roasted coffee" and providing a unique experience. Mr. Howard Schultz, please wake up and smell the coffee. You are running a business not a commune and your business is in trouble. Management needs to face the reality of the fact that consumers are abandoning SBUX in favor of McDonald's (MCD - commentary - Cramer's Take) and Dunkin' Donuts. Just today MCD reported global comp sales increases of 8.2%, and I guarantee you that part of that surge was coffee, tea and breakfast sales coming from SBUX customers.
SBUX does finally realize that the company was over-saturating the U.S. market and cannibalizing its own company sales. The unwinding of these excess domestic stores is going to cause SBUX to eat more lease costs and write off more equipment in the future.
Rather than use its cash flow to repay debt, SBUX borrowed more money (on a net basis) in 2008 to buy back stock. Hopefully the new CFO will have some good fiscal sense, because it seems that the departing one failed to de-lever the company, despite strong cash flows.
While everyone waits for SBUX to fix itself up, has anyone considered that SBUX may never restore its operations to its former glory?
Finally, not once during the entire conference call were any of the following words mentioned: Asia, Asian, China, Chinese or Pacific. I think that SBUX management is less global and more myopic in a strategic sense than previously thought.
Earnings Release and Conference Call
Starbucks reported fourth-quarter 2008 EPS of one penny and full-year 2008 EPS of 43 cents. Revenue of $2.515 billion was generated in the quarter and $10.383 billion was generated for the full year. Included in the results were 9 cents for after-tax restructuring charges in the quarter and 28 cents for the year. Adjusting for restructuring charges brings EPS from continuing operations to 10 cents for the quarter and 71 cents for the year. All metrics missed analysts' consensus estimates.
SBUX opened 132 net new stores for the quarter and 1,669 for the full year, closing the period with 16,680 global units. In the quarter, SBUX closed 200 of the 600 U.S. company-owned stores that were identified as underperformers. In addition, 61 stores were closed in Australia.
October did not show further deterioration to comps and traffic. In the past few weeks SBUX has experienced improving comps on an "episodic" basis. Traffic has increased in stores that are located near closed stores. Consolidated same-store comps (-7%) declines were attributed to declines in traffic (-4%) and average check values (-3%). U.S. same-store comps (-8%) declines were attributed to declines in traffic (-5%) and average check values (-3%). Management cites the de-emphasis of merchandise and music inventory to the decline to average checks in the U.S. The downturn in the U.S. has spread to Europe. However, SBUX free Election Day coffee offer spurred strong sales of the Thanksgiving blend.
Operating margins were 0.6% vs. 10.2% a year ago. 390 basis points of margin compression were due to the company's restructuring.
SBUX has capacity for up to $1 billion in short-term borrowings, of which $271 million is still available. Long-term debt outstanding stood at $550 million. The company generated $1.3 billion in cash from operations and expended $985 million on capex. As of the end of the quarter, SBUX had $270 million in cash on hand, $50 million in short-term investments and $71 million in long-term investments available for sale.
For full-year 2008, SBUX had 3% comp declines and non-GAAP EPS erosion of 18%. For full-year 2009, if comps are similar to full-year 2008, then SBUX expects to generate "significant" EPS expansion in full-year 2009, by 25% to 90 cents per share on a non-GAAP basis. |
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rffrydr
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rffrydr
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| Posted: Thu Oct 02, 2008 8:24 pm Post subject: |
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Behold: $100 gift card for $79 at Costco.
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rffrydr
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| Posted: Tue Sep 16, 2008 9:33 pm Post subject: |
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Good mover today...stealthily moving up for awhile.
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HenryTo
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| Posted: Fri Jul 18, 2008 10:52 am Post subject: |
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Full list of Starbucks closures:
http://www.starbucks.com/aboutus/pressdesc.asp?id=882
In other news, there's no doubt that the Starbucks brand is now commoditized (it deserves to be trading at a McDonalds type of P/E) but I tried the new Vivanno drink (orange-mango-banana) yesterday just to see if this had a shot of salvation (never mind that every neighborhood store is now offering similar type of drinks). Just my two cents but I found it to be very blend from a taste standpoint - which matters a lot since those who frequent SBUX are now exactly "health nuts." Other opinions are welcomed! |
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rffrydr
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diesel
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| Posted: Tue Jul 01, 2008 9:11 pm Post subject: |
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Cant say I am thrilled this is the direction they have had to head down. No doubt the balance sheet will thank them but what about growth. Starbucks the new value play?
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HenryTo
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| Posted: Tue Jul 01, 2008 3:14 pm Post subject: |
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Starbucks to close 600 stores and slash as many as 12,000 positions. Stock up more than 5% in AH trading:
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Starbucks to cut as many as 12,000 positions
Tuesday July 1, 4:33 pm ET
LOS ANGELES (Reuters) - Starbucks Corp (NasdaqGS:SBUX - News) said on Tuesday it plans to close another 500 underperforming stores and eliminate as many as 12,000 fill- and part-time positions.
The company, which now plans to close a total of 600 underperforming stores, will take related charges totaling more than $325 million.
The majority of the stores will be closed by the end of the first half of its fiscal year ended September 2009, the company said.
Starbucks said 70 percent of the stores targeted for closure have been open since the beginning of fiscal 2006.
Starbucks estimated the total pretax charges associated with the planned U.S. company-operated store closures, including costs associated with severance, would be in the range of $328 million to $348 million.
Starbucks also said it will open fewer than 200 new U.S. company-operated stores in fiscal 2009, down from 250 previously. |
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rffrydr
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| Posted: Fri Apr 11, 2008 10:59 pm Post subject: |
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McDonald's is giving away a free medium iced coffee with any purchase on 4/15/08 to "celebrate" tax deadline. No coupon needed. Enjoy!
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rffrydr
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| Posted: Wed Mar 19, 2008 1:34 pm Post subject: |
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http://www.reuters.com/article/businessNews/idUSN1932070520080319
| Quote: | | ...battling to revive U.S. growth in an economy that is in a "tailspin" plans to roll out a line of energy, health and wellness products, Chief Executive Howard Schultz said on Wednesday |
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Vigile
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rffrydr
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nodoodahs
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| Posted: Tue Feb 26, 2008 2:36 pm Post subject: Starbucks closes so that they can learn to make coffee |
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http://www.guardian.co.uk/business/2008/feb/26/starbucks
IMO it won't help a darn bit with the coffee quality. Their roasting process is why their coffee is so bad. Burning the beans in search of a "consistent" roast is NOT the solution.
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rffrydr
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