Starbucks 4Q Profit Drops 97 Percent
Holy Smokes. Did you see the news on Starbucks? I figured they were hurting, but their earnings report yesterday surprised me. The AP reported that:
Fewer U.S. customers and venti-sized costs for closing poorly performing stores led to lower sales and profit in the fourth quarter at Starbucks Corp., the company said yesterday. Seattle-based Starbucks said profit fell 97 percent to $5.4 million, or a penny a share, from $158.5 million, or 21 cents per share, a year earlier. 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. Starbucks began shutting the U.S. and Australian stores this summer as part of a campaign to reverse falling profits
We talk a lot here about the little things that people can do to cut back on expenses... and almost always, we explain that even a small thing like buying a cup of coffee every day adds up. Just think, if you're spending at a minimum $2 every day, five days a week every month, that's $40 you're shelling out every month for a cup a' joe.
Most of those fancy coffee drinks are more than $2 so you do the math.
In these economic times, are you finding yourself cutting back on little things? Are you brewing your coffee at home? Packing your lunch? Eating at home more? Waiting longer to get your hair cut? I finally made it to my hairdresser last Saturday (believe me, I needed it. I was starting to resemble Sasquatch with all that hair!) and he told me that business has really been suffering for the shop. Fewer and fewer people coming in for haircuts, colorings or perms.
I was also talking to a good friend of mine from Harford County who owns a pizza shop near Bel Air and he said the car shop he went to recently to get an oil change told him that people are waiting longer to get their oil changed...! That's probably not a good idea since that's a small expense that will keep you from having a major car expense down the road.
Are you guys hearing similar stories? Let us know. Also, are you finding yourself making decisions on which expenses can wait and which can't? We want to hear about it.
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Comments
I've been limiting my nights out at the bars,going out one or two nights a week instead of four or five. That little bit helps. I'll never give up my daily coffee shop routine,that comes first for me.
DD: Thanks Don. I allow myself a cup or two each week. But mostly I bring it from home. Anyone else?
Posted by: Don | November 11, 2008 4:34 PM
At least in my own personal situation I have pretty much reassessed and rebudgeted my entire life. The days of disposable income seem to have passed me by at this time. Living in Vegas is always chock full of temptation and opportunities to drain your bank account. I find myself staying at the house and hanging with friends considerably more and trying to hang on the financial solvency.
DD: Thanks Vegas Charlie. Temptation is definitely everywhere. Hanging at home is something I do pretty frequently.
Posted by: Vegas Charlie | November 11, 2008 4:40 PM
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
DD: Thanks Adam. It really does seem like Mr. Schultz has lost the confidence of Wall Street, employees and consumers. That early closure back in February to retrain and re-energize employees seems even more of a failed gimmick now, doesn't it?
Posted by: adam hartung | November 11, 2008 5:37 PM
I definitely always make my coffee at home and bring it to work in the morning. The coffee I make at home is SO much better than most of the stuff I can buy, in addition to being cheaper! My problem has been the late-afternoon coffee run, but I am thinking of maybe buying a thermos to bring more coffee with me to work. Or just skipping afternoon coffee altogether.
I am really making an effort to pack my lunch more often, and am saving the going out for the weekends, for the most part, as opposed to 3 or so weekdays in addition to the weekends. Eating & drinking at home is so much cheaper!! Plus, I am newly learning the joys of sleep!
The thing I am having a problem with is shopping. The funny thing is, I am usually not a shopper at all, but now that there are so many sales and good deals, I feel like I can now buy stuff that I otherwise wouldn't or couldn't afford.
Posted by: aeb | November 11, 2008 6:53 PM