Starbucks: Trouble in Latte Land

News Type: Event — Seeded on Fri Nov 16, 2007 8:36 PM EST

Article Source: Business Week

business, stock-market, starbucks, coffee-shops, 52-week-low

As expected, shares of Starbucks (SBUX) took a cold latte (with a splash of peppermint) to the face on Nov. 16. The stock tumbled more than 7% in Friday's session, to a new 52-week low, but recovered somewhat by the close, off nearly 4%, to $23.17. Volume was more than six times the normal 10.6 million shares. Given the company's weak outlook after the market close, the debate over whether Starbucks is a buy still rages around the financial blogosphere.

Published to:

MinnieApolis's Column, All of Newsvine
Groups: Coffee Lovers, Family Finances, Urban Vine
Regions: Seattle/Tacoma

What's this?

Who's leading the conversation?

This visualization below allows you to see the impact that each user has on the current conversation. The top row contains the group of users who have had the most impact, the 2nd row the group of users who have had the 2nd most impact (et cetera). Users with similar impact are grouped together, and the average score of the group is shown to the left of the group. The author of the article is also shown on the left, in their corresponding group. Each user's score is based on the number of comments the user has made plus the number of votes their comments have received. The scores are calculated relative one another, so while their absolute value is not particularly important, their relative difference does indicate a larger difference in impact on the conversation.

1.3

{"commentId":1192695,"authorDomain":"MinnieApolis"}

MinnieApolis

The article referred to at the end of the story is: Starbucks (SBUX): Time to Buy the Broken Growth Story? - November 16th, 2007 by James Cullen here (scroll down past the ads to the text) -- RE

"But at the same time, I'm still cautious because:
1. That's how I am
2. I'm not completely sold on the store expansion model (need we have 40,000 Starbucks stores?)
3. The differentiation vs. commoditization factor of coffee"

Also the per store profit has gone up mainly because of 2 price increases. Store traffic is down and no one has been able to pin down the cause to stiffer competition (McD, Dunkin Donuts, etc) or to the fact that consumers had less disposable income for small luxuries what with the insane gas prices.

{"commentId":1192695,"threadId":"177109","contentId":"1102899","authorDomain":"MinnieApolis"}

#1 - Fri Nov 16, 2007 8:44 PM EST

{"commentId":1201450,"authorDomain":"fayfamily7"}

fayfamily7

My believe is that since Starbies created the market, they unfortunately created a belief that coffee can be great. How is this an issue. Well, all the independents that grew because of Starbies are focused on quality, whether it be for the grower, or the drinker, they love quality, and Starbies has not followed this pattern. The only looked at the quality of there bank account. This always catches up at some point, the concept of raising prices and lowering quality and COGs wont bring in new customers and wont hold on to existing customers forever.

{"commentId":1201450,"threadId":"177109","contentId":"1102899","authorDomain":"fayfamily7"}

1 vote

#2 - Tue Nov 20, 2007 8:50 AM EST

{"commentId":1283011,"authorDomain":"MinnieApolis"}

MinnieApolis

(Sorry Tracker lost your comment for a month.)
This is a good point, probably THE main point -- quality over image & profit.
Lots of java fiends are switching over to a local coffee shop or local chain, rather than the big guys. I know some who only stay with Starbucks because they banned the BGH milk. Other only go to Bruegger's because ALL their coffee is free trade, not just one or 2 lines.

{"commentId":1283011,"threadId":"177109","contentId":"1102899","authorDomain":"MinnieApolis"}

#2.1 - Tue Dec 18, 2007 3:50 PM EST

{"canLink":false,"threadId":"177109","isPrivate":false}

MINNIEAPOLIS

Backyard

Starbucks: Trouble in Latte Land

Published to:

FUN STUFF:

COMPANY STUFF:

LEGAL STUFF: