Read highlights from Starbucks' earnings call with analysts

Howard Schultz tells analysts: "VIA is now projected to contribute over $100 million dollars to Starbucks' top line in Fiscal 2010, a significant achievement by any measure."

Starbucks CFO Troy Alstead finds a V-word to use with his VIA comment:
"We very pleased by the velocity gains that we're seeing in our key customers. So as we build distribution, as we drive velocity, all those things lead us to be as optimistic about VIA as you’ve heard us speak to."

More from Alstead: "Our business produces a tremendous amount of cash. ...We have a very, very strong cash producing business, strong cash on hand, free cash flow this year, 2010, that will reach probably in the range of $1.2 billion based on operating cash flow of about $1.7 billion." || Read "Starbucks earnings call transcript" || Read Howard Schultz's quarterly results summary

Comments

[Melody(with the blog)]

I thought Cliff Burrow's conversation about the LEED store remodels was interesting stuff. In 2010 about 100 stores went through (or are going through) these kind of renovations using the design strategy of LEED stores, and about half of those were "major" remodels. I assume that what is meant by that is that the "major" remodels are places like 1st and Pike, Univ. Village, Soho in NYC, and several others.

In 2011 it will be more like 1000 stores going through these remodels with about half again getting "major" remodels.

That's a lot of stores with really great store designs coming on their way. I've heard that some of these remodels can be like $200k or $300k. I think it's totally worth it if it creates a renewed enthusiasm in the customers' experience. Leaves a better brand image, and makes them more likely to come back. I also think that partners would have a ton of pride in their unique store, though I guess I have no idea if that's really how baristas see it.

Sorry for the ramble, but I'm really interested in the topic of store design. I've seen some amazing Starbucks lately, and at least for me, it's inspiring.

[(former) FLA SM]

"We very pleased by the velocity gains that we're seeing in our key customers. So as we build distribution, as we drive velocity, all those things lead us to be as optimistic about VIA as you’ve heard us speak to."

VELOCITY
ve·loc·i·ty
NOUN:
pl. ve·loc·i·ties

1. Rapidity or speed of motion; swiftness.
2. Physics A vector quantity whose magnitude is a body's speed and whose direction is the body's direction of motion.
3.
1. The rate of speed of action or occurrence.
2. The rate at which money changes hands in an economy.

Inigo Montoya: "You keep using that word. I do not think it means what you think it means."

[James Connolly]

The entire transcript boils down to this.

'Hey partners! Aren't already fabulously wealthy? Good luck getting even a scintilla of the money that you generated for the company over the past three months! We're going to go and pack about half of the profits into the pockets of the Wall Street robber barons that created the horrible economic conditions that surround us right now, and keep the other half to buy Howard and the rest of the top-level executives gold plated toilets. Keep up the good work!'

[anon-girl]

As a 4+ year Starbucks employee, I just cannot get excited about this. If anything, I'm enraged and the optimism of growth, when the employee side of the company is in the gutters in terms of morale, and pay. I can confirm the uptick in traffic, at a store level as we are comping very well as compared to last year. The pressure to sell VIA continues to be at fever pitch while each store in the US continues to live with widespread burn outs, excruciating expectations, and very little by way of thank you.

I realize that ultimately, businesses are about making money, but when you come home from work every day, supremely frustrated at the lack of labor, the lack of employees, the increasing work load, and customer traffic, it's hard to get excited that I'm making some one else rich.

[Third Career]

To the extent that SBUX is self-insured, and it most likely is for many things, they better put aside some of the money into their reserves.

As they continue the labor model of insisting on a negative variance and partners are stretched thinner and thinner as they are given ever increasing task lists, not to mention store traffic increasing, that rock bottom store level morale will result in partners making legal claims they might have by-passed when they clearly a more valued part of the SBUX "family".

The SBUX family is now totally dysfunctional and partners are feeling increasingly like Uncle Howard and his minions just see us as totally interchangable automates. Hard to feel any loyalty to the company when it only goes one way.

Anybody outside of a Clover store have any coffee tastings/workshops lately? How about some Via with that?

[Frank]

To the previous two commenters above, and to the commenters who have said many similar things on this site, can SBUX do no good? If their quarterly results are bad, it's a sign they're losing money and are therefore doomed. If their quarterly results are good, they're not paying their partners enough, hence morale is in the tank and therefore, yes, they're doomed. Heads they're doomed, tails they're doomed? Is that about it?

If you're working at SBUX or any other job and hate it, it's time to switch jobs -- not just for the customers who expect a great attitude from you, not just for your fellow employees whom your attitude will affect, but most of all for yourself. Life is too short to dislike your job. And if you're staying because it's a tough world out there, especially at the moment, then you might want to consider the fact that your pay and benefits are among the best in the fast-food or restaurant industry and that there are a lot of people who would love to have your job right now.

[James Connolly]

@Frank - Why is it whenever people have problems at work and articulate them that some genius always comes sailing in and says, 'well if you don't like it find a new job,' as if that's some kind of pearl of wisdom? Why is it always the people who are suffering at the hands of awful management that need to make a change and not, y'know, the awful management?

Also, I don't know if you've noticed this, but there are five job seekers for every job opening right now. Just quitting and finding new employment isn't exactly an option for most people.

[Frank]

@James:

Let me point out the irony in your post. If there are "five job seekers for every job opening right now," which could well be right, then how "awful" is the management of a company that pays more than minimum wage, offers benefits not given out by most of its competitors, and requires little or no experience of new employees?

[James Connolly]

@Frank: Considering that the company has more than enough money on hand per quarter to undo the labor cuts and wage cuts that continue to make the lives of the wage workers who make Howard Schutlz's multimillion dollar compensation package possible and yet doesn't do any of those things, I say the management is pretty awful.

But what do I know? I believe in this WACKY idea that the people who earn the money should get their fair share of it instead of someone in Seattle who hasn't actually worked for decades.

[Frank]

@ James:

Saying the management of SBUX is "pretty awful" but refusing to leave for what would presumably be greener pastures makes about as much sense to me as the people at town hall meetings who scream, "Keep your government hands off my Medicare!"

If SBUX is so badly run that you leave, then you'll be voting with your feet. If enough of your fellow employees feel the same way as you, SBUX will feel the pain and will be forced to change their ways, either because they can't hire enough employees or because the employees they're hiring aren't good enough to uphold SBUX standards.

If, on the other hand, SBUX is run well enough for you to stay, then again, you're voting with your feet. And if enough fellow employees stay, then SBUX won't feel the pain and won't feel the need to change their ways. And if you stay, then you should be committing to do everything you can from the inside, in a positive manner, to make it the best possible company it can be for shareholders, customers, and employees.