Starbucks Falling
Posted May 1st, 2008 by admin
You know the economy is tanking when market stars like the Seattle-based coffee giant lose profits. Starbucks (SBUX) profits plunged 28% in the second quarter, a loss of over $40 million. The company low-balled expectations by warning that the numbers would not live up to the market hype. Analysts had pegged a 21 cents per share profit, but in reality, the company netted a 15 cents per share loss.
Starbucks executives rationalize that all businesses in the retail and restaurant industries are suffering the same setbacks. However, shakeups at the company have not shown much success yet. CEO Howard Schultz, who returned as chairman this year after eight years away from the company, has tried to revamp Starbucks while retaining popularity and profits. New features such as signature coffees and new health-conscious offerings. Despite the addition of 266 new stores, the numbers have not been responding as they have in years past.
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In my opinion, Starbucks has really been going downhill in the last few years. The coffee has gone down in quality, and their pre-frozen baked goods are not very good or worth the price. I'd much rather visit a local cafe with fresh pastries and good espresso than visit Starbucks.