Starbucks Gossip

Check out Starbucks' new beware-of-cheaper-coffee ad campaign

"It comes with a price," Starbucks says in one of four new ads it unveiled today. Melissa Allison reports they're part of Starbucks' new long-term brand campaign to share its values and combat the idea that its coffee is too pricey. The campaign kicks off on Sunday with a full-page ad on the back of The New York Times' business section. || You can see the ads here.

What Starbucks told employees about Wednesday's earnings report

With the second quarter earnings announcement behind us, we wanted to take a few moments to reiterate some of the key themes from the call and give context to the early reaction from media and analysts. 

 

As we discussed today, we are very encouraged by some positive trends in our second-quarter performance. While some of the initial press headlines are focused on an excessive profit decline, they are not taking into account the one-time restructuring charges we are taking for store closures and associated expenses. In short, we beat the consensus analyst estimates this quarter and we’re making progress on our cost-savings initiatives and the overall U.S. business. Our progress today is in large measure due to the tough decisions and sacrifices we have made across the business during this past year of restructuring. The company has come a long way and we have much more to do, but we should all feel good about today’s results.  

 

A few key themes emerged from the earnings call today. Let us share a few of these with you: 

 

We are Healthy

With a strong balance sheet and cash flow, continued cost savings, Starbucks is in strong financial shape and is well positioned for the future. Most important, we continue to be profitable – a claim many companies cannot make these days.

 

We are Encouraged

While the global economic crisis continues, we are seeing early signs of improvement in our business. Traffic declines have leveled off, consumer confidence seems to be rising, and new initiatives like Starbucks VIA Ready Brew are showing promise in our initial, limited roll-out.

 

We are Ready to Tell our Story

With the upcoming launch of our new marketing campaign, and with your help, we’re ready to tell our story.

 

Over the next few days there will be more commentary about our business performance and our upcoming marketing campaign.  Thanks again for all your contributions to the company and we will update you periodically with financial and media updates.  

 

Best Regards,

 

Troy Alstead

evp, CFO

 

Vivek Varma

svp, Public Affairs

Starbucks shares jump on second-quarter earnings report

Analyst Sharon Zackfia said in a note to investors that "we are increasingly optimistic that the worst of Starbucks' sales trends are now in the past, given a broad improvement in the tenor of consumer spending thus far in 2009." Another analyst, Marc Greenberg, told his clients that Starbucks' cost cuts were a positive step forward, and that "we credit management with better financial discipline." || Read "Starbucks shares rise on 2Q sales improvement"

Starbucks plans to adjust pricing in some markets

The coffee chain is raising prices of some of the more complicated drinks, while lowering those on basic drinks. For example, Starbucks will offer a "grande" size iced coffee for less than $2, shaving as much as 45 cents off the price, depending on the market. Read "As Profit Cools, Starbucks Plans Price Campaign"

"From the Comfy Chair": Juan finds a Starbucks barista worth cloning

BY JUAN VALDEZ

Starbucks
3348 Gateway Street
Springfield, Oregon 97477

Springfield is in western Oregon, about halfway down the state. It's adjacent to Eugene which counts the University of Oregon as part of its claim to fame along with the fact the movie Animal House was filmed there.

When I walked into the store, there were 3 partners on the floor and they were busy. This is a drive-thru store so one was on DT, one was on bar and one was at the front register. I thought I'd finally found my understaffed store. Alas, twas not to be...about ten minutes after I sat down, another partner came on the floor; either from break or being scheduled...I couldn't tell which. 

In the meantime, the register partner's approach to customers left something to be desired. She was cold and efficient and not a ray of sunshine emanated forth from her personage to warm the cockles of my heart – or anyone else's for that matter.

AHA Juan! That was because they were understaffed and busy and she was stressed not only because of that but because of the way upper management has been running the company lately and who does Howard think he is with an expensive house in both Seattle and New York??!! /CONTINUED IN THE FIRST COMMENT BELOW

Starbucks' second-quarter profit down 77%, store closing charges blamed

Starbucks reported fiscal second-quarter net income fell 77% to $25 million, or 3 cents a share, due to charges to close stores. A year ago, Starbucks earned $108.7 million, or 15 cents a share. Sales fell to $2.3 billion from $2.5 billion. Excluding charges, Starbucks said it made 16 cents a share. Analysts had expected Starbucks to earn 16 cents a share on sales of $2.38 billion. || Read "Starbucks profit down 77%, hurt by charges" || Read Starbucks' release

Starbucks hopes its Seattle's Best Coffee will be its growth engine during the recession

Even as Starbucks closes hundreds of namesake locations, it is seeking franchisees to open new cafes and kiosks of Seattle's Best Coffee nationwide.Starbucks says the slightly lower prices and milder taste of Seattle's Best Coffee make it an especially viable vehicle for growth. Read "Starbucks looks to Seattle's Best chain for growth"

Starbucks unveils its new online Global Responsibility Report

According to the report, Starbucks wants to have a recycled cup available by 2012 and to have all its cups be reusable or recyclable by 2015. It also wants to reestablish ceramic mugs as the standard for people who drink their coffee in stores. Read "Starbucks' new Global Responsibility Report is online, can be customized"

OPEN THREAD conversation-starter: Starbucks is #24 on Fortune's "Best Big Companies to Work for"

The rankings just came out -- and I know this will start another string of moaning and groaning about work conditions. But..... there's got to be some reason Starbucks landed in the top 25. Discuss this or anything Starbucks-related in the open thread. || Jump to the second page of comments.

"From the Comfy Chair": Juan stops by Howard Schultz's neighborhood

BY "JUAN VALDEZ"

Starbucks
4000 E. Madison
Seattle

This particular column should be called "From the Starbucks that used to be a Starbucks cafe but that got scrapped a while back so now it's just a huge Starbucks" because, this week, I decided to mosey on over to Howard Schultz's stomping grounds amidst the stately mansions of the Madison Park neighborhood of east Seattle and see what was going on.

Madison Park is quite the place. It manages the neat trick of being in an urban area without seeming to be urban. It sits at the bottom of a hill, on the edge of Lake Washington and if you weren't familiar with the environs known as downtown Seattle, you'd never know downtown Seattle sat just three miles over the hill. You'd also never know that, about half way between you in Madison Park and downtown is the hood otherwise known as the Central Area. And yes, I say hood knowing full well what it means.  Ahhh...the smashing together of cultures. But that's what diversity is all about, eh?

I knew this store was the original Cafe Starbucks but, still, I wasn't expecting it to be so big. I think it pushes 4000 square feet in size which is getting close to the size of a Denny's. There's two condiment bars serving two separate seating areas.  For our purposes, that means two separate condiment bars not to clean. And there's more tables not to clean. And much more floor space not to be swept. 

Honest to God, I really thought a store so close to Howard's heart would be more on the ball but they weren't. The only time someone came out from behind the counter while I was there was to replace a milk pitcher. That's it. And they didn't bother to look at any part of the lobby to see if it needed cleaning, which it did. The bathroom had the prerequisite scratches and phlegm stains on the mirror (I'm beginning to think they send them from the factory that way) as well as some paper towels scattered on the floor. /CONTINUED IN THE FIRST COMMENT