uscitizen
Villified User
By Lisa Baertlein
SEATTLE (Reuters) - Warning of an economic "tailspin," Starbucks Corp (SBUX.O: Quote, Profile, Research) outlined long-awaited plans to turn around its U.S. business on Wednesday, but details from new coffee machines to a rewards program for frequent customers failed to excite investors, who sent shares down 4 percent.
Chief Executive Howard Schultz told the company's annual meeting there was no "silver bullet" for fixing Starbucks, whose stock has dropped 40 percent over the last 12 months.
The company's blazing U.S. sales growth stalled in the most recent quarter, when a decline in traffic caused sales at domestic stores open at least 13 months to fall 1 percent -- the first quarterly fall in company history.
Schultz returned as chief executive in January, promising to change what he had called the "commoditization" of the brand, but John Langston, a senior analyst at Hodges Capital Management, said he did not hear anything that made him want to buy the stock again.
"I didn't really hear anything that blew my skirt up," he said.
Starbucks aims to woo consumers, who are rethinking their spending amid a broad economic downturn, by rolling out a new coffee blend, delving into energy drinks and investing in espresso equipment and high-end French presses. It said it had bought 'Clover' French press maker Coffee Equipment Co.
Starbucks has long said its $3 to $5 coffee is an "affordable luxury," but that assumption is being challenged because consumers are spending less on everything, from dining out to buying clothing, as home prices fall and the cost of necessities such as gas and fuel continue to rise.
"We're an affordable luxury, but there are forces of nature here that we can't control," Schultz told journalists.
http://www.reuters.com/article/businessNews/idUSN1932070520080319?feedType=RSS&feedName=businessNews&rpc=23&sp=true
SEATTLE (Reuters) - Warning of an economic "tailspin," Starbucks Corp (SBUX.O: Quote, Profile, Research) outlined long-awaited plans to turn around its U.S. business on Wednesday, but details from new coffee machines to a rewards program for frequent customers failed to excite investors, who sent shares down 4 percent.
Chief Executive Howard Schultz told the company's annual meeting there was no "silver bullet" for fixing Starbucks, whose stock has dropped 40 percent over the last 12 months.
The company's blazing U.S. sales growth stalled in the most recent quarter, when a decline in traffic caused sales at domestic stores open at least 13 months to fall 1 percent -- the first quarterly fall in company history.
Schultz returned as chief executive in January, promising to change what he had called the "commoditization" of the brand, but John Langston, a senior analyst at Hodges Capital Management, said he did not hear anything that made him want to buy the stock again.
"I didn't really hear anything that blew my skirt up," he said.
Starbucks aims to woo consumers, who are rethinking their spending amid a broad economic downturn, by rolling out a new coffee blend, delving into energy drinks and investing in espresso equipment and high-end French presses. It said it had bought 'Clover' French press maker Coffee Equipment Co.
Starbucks has long said its $3 to $5 coffee is an "affordable luxury," but that assumption is being challenged because consumers are spending less on everything, from dining out to buying clothing, as home prices fall and the cost of necessities such as gas and fuel continue to rise.
"We're an affordable luxury, but there are forces of nature here that we can't control," Schultz told journalists.
http://www.reuters.com/article/businessNews/idUSN1932070520080319?feedType=RSS&feedName=businessNews&rpc=23&sp=true
