Starbucks (SBUX) announced a major change of course yesterday when the hyper-expansive coffee retailer announced that it will shutter 600 under-performing stores and lay off as many as 12,000 employees as it comes to terms with an unexpectedly difficult operating environment. CEO Howard Schultz, who built the iconic company from its Seattle roots into a national chain and one of the most recognizable brands in the world, recently was brought back to try to rekindle some of the magic as the company’s shares have fallen over 60% from their all time high reached in 2006 and are now trading at
I'll admit the headline is a bit deceptive. On one hand McDonald's (NYSE: MCD) has seen a resurgence in its business and frankly, the shares have done very well. In fact since McDonald's went through its own set of problems five years ago, the stock has since tripled in value.
The parallels between Starbucks (NASDAQ: SBUX) and McDonald's are very eerie. Starbucks has hit the proverbial wall after a successful ride from 1992 to 2007 as one of the premier GameChanger stocks aroun
Recap of CNBC's Fast Money, Monday June 16. Click on a stock ticker for more analysis.
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Gassing Up: Chesapeake (CHK), AMR (AMR)
The Dow finished lower on worries about the economy, but Najarian pointed out volatility is also lower, thanks to the drop in oil prices. However, oil initially rose to a record high of $139 before it fell on the news that Saudi Arabia will beef up production. Joe Terranova said everything points to Friday, when the contracts come off the front of the board. However, he would buy natural gas. Najarian is bullish on CHK and AMR.
Despite the economic slowdown, or perhaps due to the pressures on beer drinkers from the slowdown, Molson Coors (TAP)
reported better than expected sales and earnings for the recent quarter and the stock foamed up over 8%. TAP
has been a position of mine for several months, up over 25% before
the pop.<!--more--> The stock has appeared cheap relative to earnings and
sales, had a nice pattern of improving earnings estimates from Wall
Street and few short sellers willing to bet against it - and the
news proved they were right to be cautious.
From UndervaluedSecurities.com : Starbucks (SBUX) is now depressed due to reduced sales per store basis and market saturation in the US. However, the shining light is in its international growth and profitability. SBUX has strong fundamentals with average free cash flow of around $400-500 million per year that most likely will grow in the future due to its international growth. Howard Schultz, Starbucks Chairman & CEO (yes, he has been back since Jan 2008; this is a good sign for shareholders as he owns tons of SBUX shares) passionately stated in Jan 2008 annual shareholder letter ...
From UndervaluedSecurities.com : Starbucks (SBUX) is now depressed due to reduced sales per store basis and market saturation in the US. However, the shining light is in its international growth and profitability. SBUX has strong fundamentals with average free cash flow of around $400-500 million per year that most likely will grow in the future due to its international growth. Howard Schultz, Starbucks Chairman & CEO (yes, he has been back since Jan 2008; this is a good sign for shareholders as he owns tons of SBUX shares) passionately stated in Jan 2008 annual shareholder letter...
Despite the economic slowdown, or perhaps due to the pressures on beer drinkers from the slowdown, Molson Coors (TAP)
reported better than expected sales and earnings for the recent quarter and the stock foamed up over 8%. TAP
has been a position of mine for several months, up over 25% before
the pop.<!--more--> The stock has appeared cheap relative to earnings and
sales, had a nice pattern of improving earnings estimates from Wall
Street and few short sellers willing to bet against it - and the
news proved they were right to be cautious.
Starbucks finds itself at a point where its aggressive expansion, premium pricing, and a sharp downturn in its consumers discretionary income have combined to really put a hurting on its bottom line. Wednesdays financial release, which evidenced a rather significant miss on predicted quartely profit serves to underline the point. Starbucks will be fine in the long run but for now, it is definitely a sell.
4/24 - "CEO Howard Schultz said the "economic environment is the weakest in the companies history", and California stores are taking a big hit. They plan to close 100 stores and get back to basics, now they just need to close around 1,000 more."
"Best of luck if you are still holding SBUX shares, it's only going to get worse."
4/24 - "As a result FY2009 earnings to be "somewhat lower" than the last year's 87 cents. Starbucks said it can't be more specific "due to the lack of visibility into near-term economic conditions." In January they projected earnings of 96 cents to 98 cents. Funny how they can be very specific when expecting an increase but when a decrease is in the cards, they just cannot finger it. Translation? It will be very bad..."
"The problem is that Starbucks has stopped giving people what they want. Schultz actually said people are "spending less" at his stores but "not going anywhere else".
DELU...
4/24 - "I’ve been a big fan of Starbucks (SBUX) stock, saying to anybody who will listen that if I were allowed to buy a stock and put it on the shelf for a few years — buying more as it falls — Starbucks would certainly be one that I would consider.
Among the reasons: It’s a strong brand (and I like brands), Howard Schultz has his reputation at stake, coffee ain’t going out of style, McDonald’s (MCD) is limited as a competitor in terms of its coffee offerings and if ever there were a time to do a turnaround, it’s now — during a horrible economy — when the business would have done poorly, ...
4/24 - "The latest tidbit of gloom came in the form of Starbucks' revised outlook. Starbucks said it now expects second-quarter earnings to come in at $0.15 per share, versus $0.19 per share in the same period last year, and for revenue to increase by 12%...Even more shocking, Starbucks said earnings for all of 2008 are now expected to be "somewhat lower" than the $0.87 per share the company reported last year."
"Maybe American consumers have finally started doing the math on how much they can save by skipping the daily joe. Maybe the expenditure just isn't worth it anymore, with the cost ...
4/24 - "With the stock trading down under $16, In think that it bears watching as a contrarian, turnaround story. I think that as part of Starbucks' turnaround strategy, it understands the need to get back to basics and start doing the things that made them successful. This plus the potential windfall that its China business could produce, makes this an interesting story for the future."
"I doubt that this is a stock that's going to make a major move over the next month or two, but for investors interested in a turnaround story and with a bit of patience, Starbucks may just fill the bill."
I've been doing a lot of thinking about Starbucks (SBUX) lately, and it's not
because I'm a bit of a coffee addict, nor the fact that I've been
getting less sleep than I'm used to.
Lately, Starbucks (NASDAQ: SBUX) has felt a few sharp elbows from burger giant McDonald's (NYSE: MCD). Starbucks is a story "in transition," with any luck back to its growth and glory days. And with the return of Chairman and founder Howard Schultz to the CEO role, Starbucks is going back to the basics.
Effective immediately, Starbucks will be offering a $1 cup of coffee aptly named Pike's Peak after the location of Starbucks' first sto
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I'll admit the headline is a bit deceptive. On one hand
The coffee wars are starting to get interesting. 
