Analyst issues a rare "sell" rating for Starbucks stock

Analysts very rarely give out "sell" ratings, but in this case a Bank of America analyst did, saying that Starbucks' wage increases for all hourly team members and the unit-level manager compensation increases may have had an impact on margins. "We also believe that store operations have 'slipped' and longer lines, more complexity and less than stellar-looking assets could be causing a modest decrease in sales in this challenging consumer environment," the analyst tells his clients. (MarketWatch.com)

Comments

The stock is at an even 27$ right now...hmmm so at 15% off I'll be getting a decent SIP purchase price this time around. Thanks for the announcments anyalstists!!! If we end up getting Bean Stock this year it will be lower then the past few years so maybe we will actually be able to sell it someday rather then look at it in our portfolio wondering if the days of 36$ are gone and the shares are worthless!!!

[ex-sbuxmanager]

In related news, God announced that the sky is blue and the sun is bright.

[Cookie Jill]

Wouldn't the immense pay packages for CEO's of companies have an impact on margins, too?

What a bunch of crock. Why doesn't Wall Street just go "invest" in only "names/brands" instead of actual companies, because they certainly aren't interested in investing in America...which means making sure that working Americans are able to make enough money to live somewhere and buy some stuff.

Maybe off topic... All I wanna say is that lately I've seen baristas getting fired left and right, something I've never seen in my time at the bux. My store seems to have an undercurrent of fear and paranoia. We are trying to do everything by the book to avoid being made an example as the recently fired baristas have been. It's hard to "just say yes" when you fear losing your job over giving out a free drink or something equally as trivial.
"Cracking down"... is this the nature of Starbucks? This is not the company I joined originally, the soul seems to be leaking out.

[Dr.Dopio]

Be aware all you SBUX partners out there. The mothership doesn't like to hear talk like this. Be prepared to tighten up the belt! You think you don't get many hours now in ALS, just wait a few weeks. The man behind the curtain of ALS will make some adjustments and you will be running bare-bones labor. 0% will not be good enough. It happens every Q-1. The company is using out-dated labor software that was intended to be used for factories, not high volume retail settings. But they refuse to change because of they have the ability to adjust the parameters. This is why the lines are long, partners are grumpy, and customers are losing faith.

[Bladerunner]

Next week at our store the average hour's for a barista is about 12. The line we've been given is. "This is the slow time of year" Baristas are not guaranteed hours" "Start calling other stores to see if they have extra shifts!" Sure they have extra shifts since everyone in the district has been affected this way! How in god's name are we supposed to run a store with 2 person shifts all week? What corporate idiots! We have lines to the door with 4 people on.

[EX-BARISTA]

RE: The Crackdown.

I no longer work for the company but have plenty of friends who do. I don't know where you work, but here in north San Diego I've been hearing that the DM has been canning people left and right. People at my old store are freaking out. Hours are getting cut (in stores that can't afford to have them cut).

Maybe our CEO will be the next person to be "cracked down on". I don't know of any other company that would keep a ceo that has done this to a companies image...or stock price.

[Dr. Doppio]

I don't know if it is fair to pin it on the Founder/President. You need to look at who he has surrounded himself with. I don't know if the Chief Coffee Master Jim was the right move-the stock has been in a steady decline since he assumed those duties.Time to call back Howard Behar,heck even boring Orwin, and get the train back on track.

Time to call back Howard Behar,heck even boring Orwin, and get the train back on track.

His name is ORIN.

I find it sad how some of the comments on this site are from ex-partners, and some from current partners, and this "valuable outlet" for you all is compromising the impression of the "insider knowledge" which is probably considered by market insiders as reasons to "sell". I'd like to think that it is the cynical attitudes that are bringing down our culture, not our leadership.

Get ready for a year of actual management and leadership, peeps, as we are ensuring we have the right people on the bus.

Starbucks is showing all the signs of executive panic. They really have no clue of how to right the ship so they start throwing things at the wall. More retail merchandise, no, less retail. More drinks, no, fewer drinks. Our store consistently gets 5-stars and customer count keeps declining. And there are no new stores nearby. That's because in St. Louis we were going open 30 new stores, but now those plans have been shelved.

There is a fundamental PROBLEM with the Starbucks' business model and there's no vision at the top to fix it.

As someone who watched a former employer end up in bankruptcy because of the same situation, I can tell you it's only going to get worse.

[Burrista]

Wow, how the vultures are circling and so quick to jump on the bandwagon (or off the bandwagon, depending on your perspective). It's Jim. It's no vision. It's the managers. It's the drinks. It's the business model! It's this, it's that. Suddenly all these overlooked, bitter present and former Starbucks partners are experts on how to run a $9B company, and how if only those with wildly successful careers up to this point would just simply step aside and let folks posting on a gossip website -- gossip, for goddness sake -- run the place.

Were any of you around several years ago when the company when through the same dead cycle?

You learn quite a bit about people during adversity, and candidly, you people make me sick.

I am a customer- I went from a 4x a week customer to a 2x a month customer. I think Starbucks is just falling out of fashion. People are fickle.

Don't worry Kraft and Pepsi will fight each other to buy Starbucks out and break the company into manageable pieces.

[Burrista]

Yeah yeah. And what -- McDonald's is "in" now? Puh-leaze. McD's had low comps for years, they had nowhere to go but up. No company has had consistent month over month comps as Starbucks has. While foot traffic has certainly leveled off, the fact is the company is still making 20% compounded each year. The difference is expectations are sky high because of the past and that is simply not sustainable.

Has Starbucks dropped off in quality? I think the service has. But that is fixable.

I couldn't agree more, Burrista. You put it perfectly.

Our business has actually picked up in the last month. And what kills me is that we don't have the manpower to sit down and properly train all these new people we're getting (some for our store, AND for a new store). We've been slammed a lot, especially on the weekend, so if you're new you just kind of get pushed along with the ride (on register) and maybe, just maybe we'll get to your training eventually.

I actually had some time last night to do some bar training with a partner for the new store, and the other two partners I was closing with just kind of looked at me and then said, "man I wish I'd gotten to do that." So I've come to the conclusion that at our store lately, you get set up on the register and DT, and you just have to pick up your bar training as you go. Which is sad really, because aside from being good with customers, making the drinks to standard is pretty much the most important thing.

[jabanga]

"Were any of you around several years ago when the company when through the same dead cycle?"

-burrista

there was no "dead cycle" like this several years ago. this extended period of stagnant same store sales and a stock value down 30% over the previous year is completely undprecedented in the companies history.

[Not a Partner]

Talk about drinking the Kool-Aid!

>>>>Get ready for a year of actual management and leadership, peeps, as we are ensuring we have the right people on the bus.

[Pat Nerr]

You all need to buck up... Hopefully the stock will take a dive this quarter instead of it's usual bump up which screws up your Bean Stock grant. Hopefully it'll hit the terlit, you'll get your grant strike price and then Pepsi will do their thing and you'll get a fat pay day. Look at the bright side.

[short drip]

To Anonymous and Dr. Doppio:

I agree that engagement in the company starts at the top.

Did you know Jim did not, NOT, want to come work for Starbucks?

The moment I met him I thought he reminded of a slick-willy, disingenuine used car salesman.

I believe he has lived up to that impression.

I was thinking that maybe they sent Jim Alling to International to groom him for CEO....

Or....they brought Martin Coles to North American Retail to groom him for CEO.

This "hi partners, Jim here......don't let the coffee down, it won't let you down....." has got to go.

Jim, you have let the coffee down.

hhhmmmmm......I wonder if Howard Schultz would come back as Ceo?

Someone should start an on-line petition.

[Dr. Doppio]

Short Drip,
Starbucks talks a lot about being "genuine" and "authentic", but the CEO always appears anything but. He always appears rehearsed and almost as though he is trying to hard to be hip or fit in. Jim Alling is someone that when he speaks, people listen. You can actually feel the guys passion when he speaks. He was SBUX needs.
"hey pardners, Jim here, talking to you live from the SEAttle SUPport CENter..." just isn't cutting it.
It is always easy to pick on the people at the top, but when your bonus is over 1 million dollars a year it is to be expected.
It's true we cannot lay all the blame at his feet, there are other issues, but maybe it's time that SBUX does something proactive instead of reactive for once.

[Andrew]

I vote for Martin...

[When did this happen?!]

"Starbucks' wage increases for all hourly team members and the unit-level manager compensation increases "

what wage increases?!?!

[short drip]

There was a "near" nation-wide hourly wage adjustment last Q1 and for salaried managers, in Q2-ish.

The hourly starting pay remained the same but as a barista, you jumped 80 cents after 6 months and as a shift, about the same.

For approx 100 thousand baristas, that was a huge chunk of change for the company.

The salaried manager increase was less obvious and not everyone qualified due to where they were already at in the pay range.

[Pat Nerr]

Honestly, Jim Donald is a heck of a nice guy. I really thought he'd be the right leader fot Starbucks but maybe he's spread too thin. I think they are alot of other factors that contribute to the current situation and maybe he's just not the right guy for a crisis.

I really don't think you want HS back at the wheel... he has other things on his mind right now.

[11864BaristaSS]

I think that Jim A. will most likely be our new CEO in the next year or two. JD is a great guy and I like him alot, I just feel that maybe his time has come to find a different area of Sbux to work in, just not CEO.

[short drip]

Pat, we are both right.

In my experience, Jim can be quite genuine in a small group setting. He speaks candidly.

He does not do well engaging a large group and I think he underestimates the emotional intelligence of Starbucks partners. You can see right through him. It becomes clear that the reason he called was to comlete a task. Therefore, he has little credibility out in the field.

Lastly, I don't think Jim fully understands or appreciates the Starbucks Experience, both from a customer or partner perspective. If he did, he would protect it. If he did, that would be the reason he came to Starbucks.

It is my opinion, Jim came to run a business and help Starbucks with it's margin opportunities.

Alas, he failed at that. The only trimming of the fat occurred in the field. There are about 800 too many support folks in the SSC (which is supposed to be the Starbucks Support Center.....not the Seattle Support Center).

The whole comapny is run backwards. Too many SSC partners come up with initiatives no one says no to. Then they try to "implement" whatever idea is out in the field.

If you give "push back" then you have opportunities with Build Reationships and Interpersonal Savvy.

Starbucks has become entirely a Top Down run organization under J.D.

I think it has gone too far to course correct. It has now joined the ranks of other companies.

I drink only Starbucks Coffee. I also only brew it home or make lattes on my De Longhi Magnifica which I find to be still quite consistent!

[Pat Nerr]

ShortDrip: What I don't get is that they implemented the SSC manager's bonus program and then kept it real quiet... not realizing that someone wold bring it up as a "thank you" during the open forum... I think that bonus program for managers is no small chunk of change, but the fact that Slick Jimmy sort of brushed over it and moved on... Very Telling

I'll take on the CEO poll... voting ends Oct. 8th. I'll e-mail the results to Jim

[short drip]

Pat- What site will I find the poll?

[Pat Nerr]

you're kidding right?? greenapronstories.com or click on my name.

[Lilith]

That money should have been spent elsewhere. Let's create a poll for that.

[Burrista]

Honestly, you all sound like people who dont even know any of these folks whose first names you rattle of as if you do. Let me ask you this. If Jim is responsible for the performance of the US retail business, is he also responsible for the terrific performance of international and global consumer products? Is he doing really great in those areas but not doing something in the retail business?

And what about the other Jim -- Alling. Does he bear any responsibility?

How about each of you? Do any of you bear any responsibility?

Oh wait, that's right. You folks are responsible only for all the great things, the legendary service, and the company's success.

Did it happen to escape everyone here that before becoming CEO Jim was head of the US retail business? Which was, um, performing quite well? Oh wait. That's right. He only started screwing up after becoming CEO, and even then, only in US retail -- the part of his job he ran quite successfully before becoming CEO -- and not in Int'l and GCP. Amazing logic folks! You're all amazing!

Folks, go back to watching sportscenter and eating nachos.

[carol]

Folks, go back to watching sportscenter and eating nachos

What's with all the hostility? You act as if someone talked ill of a relative or something, do you even know Jim Donald? Get a grip, will you? If anyone is amazing it's you. Come on down from that pedestal.

[Pat Nerr]

Lilith:... soon enough... we'll do some polls on several things.

Pat, I hope your polls are scientific rather than anecdotal- and we'll ensure to cast the spotlight appropriately. I get that you are holding onto a company you no longer work for, but I think you need to move on.

[Pat Nerr]

Is there anything scientific about company performance other than human behavior or psychology? You're spot on about me... I'm a lost soul, hanging on to the past... I'm so empty inside...

jeeze... You're here too ya know?

[carol]

I get that you are holding onto a company you no longer work for, but I think you need to move on.

My sentiments exactly. Someone needs to cut the umbilical cord.We're here because we still work for the company. You cut the ties we didn't, time to let it go.

[Pat Nerr]

Let what go exactly?? You people crack me up... I'm a shareholder. Do you treat shareholders and customers this way? This is America #1 and I'm an owner of company stock #2... Go focus on getting me some more money...

I cannot stand the customers who play the "I am a shareholder card" so.....that makes you what??? More important then the 15 other people who ordered before you? Usually when a customer pays with a sharholder edition giftcard I chat away with them and ask them how long of a holder they've been or did they ever work for the company....but there are a few who make many look bad demanding less ice, or telling me what a dry capaccino is because they are a shareholder from Seattle....yeah I'm a shareholder from Massachuesetts and I'm a PARTNER! Last time I checked our company beliefs were Partner, Customer (and shareholders fall into this catergory unless they are a partner), business...hmm that makes you second to me so we will say whatever we want on this website!!!!

[STARBUCKSCARD]

I have been suggesting that people SHORT STARBUCKS for some time now. "The Emperor" really does have no clothes.
When producing a decent cup of coffee, falls somewhere below marketing MUSIC- and dictating what is played at a location- SOMETHING IS VERY WRONG!
For those who watch carefully- the amount of merchandise that remains on shelves, is marked down, several times, then marked out, at times, borders on obscene. Now, I can't feel bad for the charities that do actually see some of this merchandise. BUT, STARBUCKS' Merchandise buyers are really out of touch. WHO NEEDS THIRTY DIFFERENT DESIGNS OF CHRISTMAS MUGS ANYWAY???????? OK, reality check- for the most part- these are the same MUGS that are in dollar stores- just with a STARBUCKS BRAND !!!!! And, in order to put it on those shelves, those same dollars stores have to pay less than 55cents to make a profit! So, you can fool some of the people some of the time. But, sooner, or later, some people will smarten up and go elsewhere. The line starts somewhere.......it just may not be at your local STARBUCKS!

[carol]

Let what go exactly?? You people crack me up... I'm a shareholder. Do you treat shareholders and customers this way? This is America #1 and I'm an owner of company stock #2... Go focus on getting me some more money

Focus on getting YOU more money? See, this is exactly the type of behavior some of us here talking about. Let go of what? You are serious? What do you think?

[short drip]

To "I cannot stand customers who play the shareholder card"

The business philosophy has not been
Partner, Customer, business for a couple of years.

It went to: "Partner and Customer" as duo #1 priorities and Business second".

For what it's worth...

[ALBERTA KEARNEY]

Starbucks, is not a good comany to work for any. I have been with Starbucks for 8 years in Management and shift supervisior. The DM only care about there bounses. We used to hired people you cared about the company, all I see people don't even know how to make drinks. The new hires don't even the mission statement. I work at drive thru Starbucks, that is the worst thing that Starbucks created, since we had drive-thru stores our stocks had dropped. We don't bring to customers in the stores sell our retail. Our marketing team also suck the retail is not good as it used to be. Starbucks is going to be the Enor. I am in the process of writing a book about Starbucks its good and bad side of starbucks.

[Pat Nerr]

Carol, I can tell you're super-sensitive and can easily get fired up by reading and hearing things that don't jive with your way of thinking. It's gotta be tough to come to a place such as this...

It's just coffee, have a cup...

and yes, I was just kidding about the "go make me some money" comment.

[Pat Nerr]

Short Drip: I'm not so sure "Partner" is that high anymore. I think it's in 4th place now...

The 4th Place

[short drip]

Pat- You are right. The 4th place. Funny.

This site is very liberating and your blog page is hysterical.

[SeattleInvestor]

- Declutter the stores! I don't mind extra merchandise at christmas time, I kind of expect it as the arrival of holiday season. But year round isles being blocked? Forget it!

- If something has to be marked down to sell, its taking up valuable space. Pull it from the shelves and put it on ebay.

- I am concerned that there is a drift in focus with all the music, and lefty causes. I want to see SBUX get back to core business.

- I like the drive throughs, and they increase store throughput. I don't go for a friendly chat, but good coffee and a pastry, and/or sandwich. They do make the shift work hardware, but this is more sales.

- I have lived through a growth company, and have seen mgmnt changes. All the gripes I see about SBUX have been said inside my old company, which was software. It's growing pains people. It does bother me if a manager in a store can't pull a good expresso, or does not drink coffee. This is like death to a software company when manages don't understand computer code.
(I have had multiple starbucks store employees tell me in the store they don't drink coffee at all, but they are willing to make a recommendation...)

- I always forget to use my shareholder card, so I guess I never get a chance to show off with it. But, then again, I don't have 30 shares, but thousands.

- No, I did not work for the company, but purchases the shares in the open market since SBUX was (is?) a great growth story, and I used to be a more frequent visitor.

SeattleInvestor

[ALBERTA KEARNEY]

Dear SeattleInvestor,

Most the stores have push-button machines. Anybody can work at Starbucks now. Until you have work at a store, it really hard to say anything. I also have thousand of stock share with the company.I have seen all the memos, Starbucks is going down the drain.

ak
8 year partner