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MSNBC reports that Starbucks (NASDAQ: SBUX) is closing 600 stores. The closings could eliminate as many as 12,000 jobs -- this is 7 percent of Starbucks' global workforce.
The move isn't that surprising given Starbucks' recent weaker-than-hoped sales. But, still, it is a big change from its famous strategy of opening stores lots of stores, many in close proximity to each other. "Starbucks, known for sometimes going so far as to open stores across the street from one another, has recently acknowledged that it may have lost some of its luster during a long period of rapid store openings and expansion into everything from breakfast sandwiches to movie promotions," writes senior writer Allison Linn.
Starbucks will take an after tax write-down of between $328 million and $348 million related to the store closings. But because of tax benefits, it expects to see total cash outflow of about $100 million. Starbucks stock is up 6.5% in after hours trading.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
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Reader Comments (Page 1 of 1)
7-01-2008 @ 10:18PM
valerie denise said...
Nothing but positive vibes--it must be the coffee! Definitely enjoy the jazz sounds, the diversity in ethic, economic, & ages of people that frequent there. It's "the place" my one & only & I go for good conversation & a nonacoholic beverage that sets the mood for an enjoyable evening. Sorry the breakfast sandwiches were discontiued. Coffee & breakfast, sounds like a match made in heaven! Really liking the drive thru locations when I'm pressed for time or don't feel up to getting out of the car. My order sounds like this: A tall coffee please, no room for cream, an apple fritter, & don't forget the John Coltrane CD. Thanks, have a safe day. Thats 3-4 days a week--one CD a week. Great non-acoholic "watering hole"--much better than a bar.
7-01-2008 @ 11:14PM
carolescn said...
It,s sad when a company like McDonalds has to add flavored coffees to their menue, Like they don,t have enough things on the menue It doesn,t even compare to starbucks taste. Starbucks is so much better, Why does a large corporation try to run another company out of business, Starbucks gives all their part time employes medical benifits, And above minimum wage. Most of their workers are college students working their way through school. McDonalds pays minimum wage and no medical benifits to their part time employes. Support your local starbucks, They are a great company. And good to their workers,
7-02-2008 @ 7:15AM
al coholic said...
In the March issue of 2007 Consumer Reports Starbucks came in behind MacDonalds in a taste test. At a cheaper price. More for less. Why is that wrong?
Since Starbucks saves a ton of money because consumers (via tips) make it possible for them to pay their help much less, a case could be made that we, the consumers, are footing the bill for these benefits.
At least at MacDonalds there aren't any tip jars.
7-02-2008 @ 8:20AM
Constable Odo said...
Starbucks company CEO living in luxury pulling down a multi-million dollar salary with plenty of perks, yet young working-class people just struggling to survive day-to-day are getting laid off. Unfair times we live in.