Starbucks Profit Drops 97% As Stores Close

[OhioChick]

Source: AP

Profit Falls To $5.4M From $158.5M

POSTED: 7:36 am EST November 11, 2008
UPDATED: 7:42 am EST November 11, 2008

NEW YORK -- Starbucks Corp. said fewer U.S. customers and venti-sized costs for closing poorly performing stores led to lower sales and profit in the fourth quarter.

The quarter's results came at the end of a transition year for the coffee retailer, in which former Chief Executive Howard Schultz took back the reins of the company to again fill the CEO and chairman posts.

Seattle-based Starbucks said profit in the quarter fell 97 percent to $5.4 million, or a penny a share, from $158.5 million, or 21 cents per share.

The coffee retailer earned 10 cents per share when the costs from closing about 600 stores in the U.S. and 61 locations in Australia are excluded.

Analysts expected profit of 13 cents per share, according to a poll by Thomson Reuters.

Read more: http://www.newsnet5.com/money/17953389/detail.html

[vademocrat]

1. It can't help that they're also everyone's example for budget-cutting

It's become a cliche "that $5 you spend on mocha latte everyday..."

[Chan790]

2. What's funny and interesting...

the people who came in and bought $5 lattes are still here every day. It's the people who bought coffee beans and brewed coffee who have been scarcer.

[soleft]

3. We have a machine at work that grinds and brews fresh Starbucks coffee

It's pretty strong, so I mix it with a pack of sugar free hot chocoate and a cup of steamed skim milk. I essentialy make a grande mocha latte every day, and it's free.

Problem is I'm sure our company is going to discontinue the service soon - what with cutting costs and all.

I'm going to be so addicted that $5 latte is going to be hard to resist. But I'm going to have to. Better stock up on Mountain Dew.

[Kittycat]

4. Employee Pool?

Why don't the employees get together and buy a machine, then stock the coffee yourselves? I'm sure if enough people chip in, it will be cheaper than buying your latte's elsewhere.

[soleft]

7. I run the office mega millions pool, so I'll just charge a surtax

[customerserviceguy]

5. For $5, they're buying an experience

the chance to sit down away from the hustle and bustle of life, with a good cup of coffee. Those buying the beans were just purchasing a commodity, one they have managed to find a cheaper substitute for.

[DS1]

8. I've switched from lattes to a Pike's roast

much cheaper, and quicker

[Omaha Steve]

6. The have been spending a lot of $ in (NLRB) court

Illegal tactics to keep unions out. Several times Starbucks has settled. They still have an open case in NYC and Minneapolis.

They also caused a young girl to miss her insulin back in Sept. at Mall of America.

Just in case somebody asks for a link. Here is a video of the insulin event.

http://www.indybay.org/newsitems/2008/09/23/18540841.php

And more info: http://www.starbucksunion.org/

[stray cat]

11. They are one of the few companies that provide health care to part time workers

I think employees also are given stock.

[Omaha Steve]

15. Fewer employees have health benefits than Walmart on similar pay, can't recycle the cups either

Too many don't get enough hours to qualify.

http://gangbox.wordpress.com/2008/10/31/is-their-really-a-difference-between-starbucks-and-wal-mart/

is their really a difference between starbucks and wal-mart?????

This new “philosophy” is called “Optimal Scheduling,” and it requires that “partners” (Starbucks-speak for employees) must dramatically increase their own flexibility. If they’d like to work full time, they must be available to work 70 percent of open store hours. (For a Starbucks open 16 hours a day, as is typical, this means 80.5 hours per week.) Many Starbucks employees say they want to work more hours; the new system could make it possible for those people to work more by downsizing those who can’t or don’t want to. Starbucks spokeswoman Tara Darrow says optimal scheduling is “a win-win for our customers and partners” that will lead to “more stable scheduling and more satisfied partners.”

Liberte Locke, a New York City barista, is not one of those “satisfied partners.” Why? Because, although she has opened up her entire day to Starbucks (from 4:15 a.m. to 11 p.m.), the company is “not guaranteeing any hours, not a single one.” She’s right: The fact that no hours are guaranteed, even for workers classified as “full time,” is underscored repeatedly in the company managers’ manual. The company is demanding almost all their time and, Locke says, “We are getting nothing in return.” Optimal scheduling amounts to a permanent booty call; only the most boorish boyfriend would insist on such conditions.

FULL story at link.

http://www.iww.org/en/node/1900

Coffee Giant Has Lower Percentage of Insured Workers Than Wal-Mart

New York, NY- The myth of a socially responsible Starbucks is steadily unraveling with an admission by the coffe chain that less than half of its employees are covered by company health care. The revelation is all the more remarkable since the company has long promoted itself as a leader in employee health care while the actual percentage of Starbucks workers covered is less than that of Wal-Mart, a corporation notorious for the burden it places on taxpayers via uninsured workers.

"The Starbucks socially responsible image is all smoke and mirrors. Customers always ask, 'you get company health care, right?'" said Pete Montalbano, an IWW barista. "Starbucks employees, many of whom are uninsured or on Medicaid, knew the answer to that all along. Only now, so does everyone else."

After multiple public challenges from the IWW Starbucks Workers Union for this very statistic, the company admitted to the Wall Street Journal that only 42% of its employees are covered by company health care. Wal-Mart covers 47% of employees according to the Journal report. Starbucks' 42% figure includes management officials whose participation in the health care plan is greater because premiums, co-pays, and deductibles are more affordable with their higher earnings. Therefore, the percentage of non-managerial workers covered by company health care at Starbucks is undoubtedly even lower. The union had argued- correctly it turns out - that health care coverage would be significantly lower than one would expect from a company that claims an extraordinary commitment to employee health benefits.

"I'm a mother of four and my Starbucks wage puts me well below the poverty line," said Suley Ayala, an IWW member at the Union Square Starbucks in New York City. "My kids and I are on Medicaid- there's no way I could afford Starbucks health care without a raise and a guaranteed 30 hours of work per week. Starbucks would never budge in the past but as a union member my voice cannot be ignored."

FULL story at link.


http://greenfertility.blogspot.com/2007/10/starbucks-cups-are-not-recyclable.html

Starbucks Cups are NOT Recyclable

The plastic coating that keeps the cup from leaking also prevents it from being recycled with other paper products


Yep. Great place to work.

[Rebubula]

9. Whatever

7-11 coffee is as good, cheaper and I do not have to deal with snobby people.

/except myself, of course

[Omaha Steve]

10. Welcome to DU

Sorry you don't care about your fellow American's. I thought that was a Republican virtue.

[Rebubula]

20. LOLZ

I guess my low post count makes me a republican...

This place is amusing...I post nothing saying that I want people to be out of work (trying to make a joke and show that 7-11 is better) and two people attack as if I said I support Prop 8.

Guess my delivery sucks....

[Omaha Steve]

31. OOPS Getting to know you

I've spent so many hours telling people how bad Walmart and Starbucks are, I can get carried away. I over reacted. Please accept my apology to a newbie.

OS

[mondo joe]

13. Snobby people?

Good lord, Starbucks is a step up from McDonalds.

And those stores happen to employ people. But if you don't care about more unemployed... whatever.

[AllentownJake]

14. Don't know where you live

but they were generally a hang out for the Abercrombie kids and the wannabe hippies where ever I've been to.

Wal-Mart employs people to.

[Omaha Steve]

16. Great choice Walmart is....

Largest female discrimination suit in the history of the US waiting it's day in court. But one in four women still shop there. Also in Canada union busting charges on the docket. FULL stories at all links.



http://www.walmartclass.com/staticdata/press_releases/wmcc.html

WOMEN PRESENT EVIDENCE OF WIDESPREAD DISCRIMINATION AT WAL-MART; ASK JUDGE TO EXPAND CASE TO BE LARGEST EVER SEX DISCRIMINATION CASE


http://www.alternet.org/story/14683/

Would that $15 runway knockoffs were Wal-Mart's primary contribution to women's lives. But Wal-Mart is not only America's favorite shopping destination; it's also the nation's largest private employer. The majority of Wal-Mart's "associates" (the company's treacly euphemism for employees) are women. Their average wage is $7.50 an hour, out of which they must pay for their own health insurance, which is so costly that only two in five workers buy it.

Yet Wal-Mart is not only a horrifyingly stingy employer: Many workers say it is also a sexist one. From the Third World factories in which its cheap products are made, to the floor of your local Wal-Mart, where they're displayed and sold, it is women who bear the brunt of the company's relentless cost-cutting. Ellen Rosen, a resident scholar in Brandeis University's Women's Studies Research Program, recently observed that around the world, Wal-Mart's business practices "may be leading to a new kind of globally sanctioned gender discrimination."


http://www.forbes.com/2004/06/23/cx_da_0623topnews.html

Top Of The News
Wal-Mart And Sex Discrimination By The Numbers
Dan Ackman, 06.23.04, 9:40 AM ET

NEW YORK - A federal judge in San Francisco yesterday granted class-action status to a sex-discrimination lawsuit against Wal-Mart Stores, the nation's largest employer. The case, which now covers as many as 1.6 million current and former female Wal-Mart employees, can be decided en masse because it is based on a statistical analysis that shows Wal-Mart paid female workers less and gave them fewer promotions than men.


http://www.marketwire.com/press-release/Ufcw-Canada-910734.html

Wal-Mart Canada shuts another location after workers unionize

Attention: Assignment Editor, Business/Financial Editor, City Editor, News Editor, Government/Political Affairs Editor

TORONTO, ON--(Marketwire - Oct. 16, 2008) -

The closure of a unionized Wal-Mart Tire and Lube Express in Gatineau, Quebec "is another attack on its workers, on the community, and one more example of its blatant disregard for Canada's Charter of Rights and Freedoms," says Wayne Hanley, the National President of UFCW Canada.

"Wal-Mart thinks a cheap oil change is more important than the Canadian constitution."

Wal-Mart Canada announced Thursday that it was shutting the Gatineau outlet because a union contract, which came into force in August, didn't fit with its business model. It is the second time Wal-Mart has shut a Quebec outlet after its workers decided to form a union.


http://pr-usa.net/index.php?option=com_content&task=view&id=142262&Itemid=32

Wal-Mart Canada under triple scrutiny:

Wal-Mart Canada's bid to derail charges it broke Saskatchewan labour laws has been shot down by the Saskatchewan Labour Relations Board (SLRB). It comes just days after numerous objections were filed to thwart Wal-Mart Canada's banking ambitions, and ten weeks before charges against Wal-Mart will be heard by the Supreme Court of Canada stemming from the company's closure of a unionized Quebec Wal-Mart in 2005.

That Quebec closure was also the subject of the just released ruling by the SLRB, that the impact of the closure may have also broken Saskatchewan labour law. The unfair labour charges were filed in Saskatchewan by UFCW Canada Local 1400 in 2005 after Wal-Mart first threatened and then eventually closed a Wal-Mart in Jonquiere, Quebec after workers there had formed a union.

Local 1400 charged the Jonquiere closure intimidated Wal-Mart workers in Saskatchewan and across Canada from unionizing. Wal-Mart countered by filing to have the case dropped, citing the charges as "frivolous", while also objecting to the authority of the SLRB to judge the company on actions it had taken in another province.

[AllentownJake]

17. Kind of my point

just because you employ people doesn't make you a good guy.

[Omaha Steve]

18. Sorry

I misunderstood. Walmart is the country's largest employer btw.

[mondo joe]

27. Good guy or not isn't as relevant to me as whether people have jobs or not.

I want the people at Walmart to have fair wages and benefits.

Not to be unemployed.

[OhioChick]

23. Thanks for the links, Steve n/t

[mondo joe]

26. I live in Seattle. I work in a very low income area and the nearby Starbucks

is always full - and if you're into race as a proxy for income status, I'm usually one of the very few white people there.

[OhioChick]

22. Screw those American workers....

Who cares if they lose their jobs. :sarcasm:

[shanti]

29. 7-11 coffee is good?

good grief, it may be cheaper, but it's swill. better to grind and brew your own.

[AllentownJake]

12. Always a Dunkin Donuts man myself

Never a fan of Starbucks. Overpriced, charged for internet access, and my ex liked to hang out there. Get mad at me for bringing a dunkin donuts in while she sipped her Chai nonsense.

The rare times I go to a coffee shop I always go to a local mom and pop place. Cheaper and better enviroment.

[clspector]

19. Wait...

you mean people are no longer buying the burnt beans of Satan? That stuff is the Devil's Piss. Seriously, before I had to go off coffee, I couldn't understand why anyone would drink Starbucks when there's good coffee around. I'm convinced that additional crap they put in their drinks is to make up for the shitty bean roasting. Blarg.

[adam_hartung]

21. Schultz is wrong to follow Jim Collins' advice

Mr. Schultz' "back to basics" program for Starbucks is a disaster. Acting like a Jim Collins "hedgehog" is burrowing into the dirt - and letting competitors run right over Starbucks. This is bad news for investors, and the innovative employees that historically helped move Starbucks into new growth businesses. Read more at http://www.ThePhoenixPrinciple.com

[truthisfreedom]

24. I have a friend in the coffee business and he tells me that Starbucks is taking losses now so they

can rise from the ashes in a few years, poised to be number 1. They're cutting stores that are non-performers and putting in massive upgrades in machines and fixtures in all of their high-performing stores.

[JeanGrey]

25. When people can't keep their houses and have a hard time

buying gas they aren't going to spend five bucks on a cup of coffee. Unless they're stupid.

[olddad56]

28. People don't stop for coffee on their way to work when they are unemployed.

[SpikeTss]

30. Starbucks destroyed jobs from the very beginning

It's always amazing to me how fast people seem to forget:

http://www.guardian.co.uk/uk/2002/jun/03/globalisation.world

TextStarbucks, which was founded in Seattle in 1971, has become a favourite target for anti-globalisation and anti-capitalist protesters, along with Nike and McDonald's.

In the US it has been criticised for the aggressive strategy with which it blankets a target area, making competition so fierce that independent shops and smaller chains are forced out.

Its tactics were highlighted by Naomi Klein, in her book, No Logo.

In the end the company usually succeeds and there are now almost 5,000 Starbucks outlets across the globe.

http://portland.indymedia.org/en/2004/02/281608.shtml

Starbucks' policy is to drop "clusters" of outlets in urban areas already dotted with cafes and espresso bars. This strategy relies just as heavily on an economy of scale as Wal-Mart's does and the effect on competition is much the same. Since Starbucks is explicit about its desire to enter markets only where it can "become the leading retailer and brand of coffee," the company has concentrated its store-a-day growth in relatively few areas. Instead of opening a few stores in every city in the world, or even in North America, Starbucks waits until it can blitz an entire area and spread, to quote Globe and Mail columnist John Barber, "like head lice through a kindergarten." It's a highly aggressive strategy, and it involves something the company calls "cannibalization."

The idea is to saturate an area with stores until the coffee competition is so fierce that sales drop even in individual Starbucks outlets.

The combination of the big-box and clustering approaches to retailing is having a transformative effect on the retail landscape. Though they may represent very different retail trends, the combined effect of the Wal-Mart and Starbucks models has been to gradually erode the market share of small businesses in what was one of the few fields remaining where independent operators stood a solid chance of competing head-to-head with multinationals. With barely a second thought, retail has become a battle of the big spenders. Whether they are using their clout to drive prices to seize near monopolistic market shares, the net effect is the same: a retail arena in which size is a prerequisite and small companies can barely maintain a toehold. Like sumo wrestlers, the competition in this game must push the limits of their weight category; bigness begets bigness.

[KDTV]

32. I never liked Starbucks coffee

I prefer the coffee sold in the stands on NYC streets for 1/10 times the cost.

[DU GrovelBot]

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[burrowowl]

34. In Albuquerque, NM

Go to Napoli 2839 Carlisle NE, suite 210, good coffee not burnt -$0.25 if you use your own cup, if you don't cups are bio-degradable!