Starbucks Corp. (SBUX)

All Comments on SBUX

  • commenter
    mmf2008
    Aug 02 01:24 AM
    Infamous Anniversary - Cramer's Stop Trading! (8/1/08) [view article]
    Get the jim cramer fed rant one-year anniv widget here:
    madwidget.cnbc.com     Reply
  • commenter
    E Nuff Sed
    Aug 01 09:30 PM
    Starbucks on Sale (Part I) [view article]
    SBUX real potential is international.

    They should split the company up into 2 - a US "value" company focused on cost controls and maximizing profits (paying fat dividends) and an "international&qu... growth company focused on geographical expansion. Atria has recently done this by carving of Phillip Morris and GM may do the same.     Reply
  • commenter
    REBEL
    Aug 01 06:39 PM
    My Website
    July Payroll Playbook [view article]
    Hey IThinkBig; "Next Bull Market in 2013" ??? - are you kidding us? You should lay off that guvment Kool-Aid. Reply
  • commenter
    najdorf
    Aug 01 04:16 PM
    Phil Fisher on Profit Margins, Part II [view article]
    Very, very good analysis - much better than anything I've read on this site is a long time. Fisher's book is one of the best, and you expand on and apply its ideas very rationally.

    I would add only that the logical alternative for a company like SBUX that saturated its growth opportunities (at least in the US, and international retail expansion is complex enough that I think it should be taken slowly) would have been to start paying a dividend. Too many companies insist that investors can get a better return on capital within the company than they can get by reinvesting their dividends elsewhere. Unless the manager is Warren Buffett, shareholders deserve the choice. Another example: although I love the progress in ORCL's share price over the last few years and the margins remain strong, I wish a company this big would pay at least a small dividend rather than continuing to acquire everything in sight. I would be an ORCL shareholder for life if it yielded even 1%, but with no dividend I'm always looking for a good point to take some capital gains and look for some smaller companies with better long-term growth prospects and some better dividend-payers. Similarly, if SBUX showed any interest in paying a dividend when they finish restructuring I would be all over the company at its current price; as they stand I'm worried that future U.S. earnings will be poured into building rows of Starbucks in Europe and China (which might not produce the same returns that good American stores have produced) and shareholders will never recieve the full earnings that they're entitled to.     Reply
  • commenter
    najdorf
    Aug 01 04:01 PM
    Starbucks on Sale (Part I) [view article]
    On the other hand, it does look to me like SBUX is entering a multi-year restructuring. There are a lot of people wishing/hoping that this process works and earnings come back, and that holds the share price up relative to earnings. If the company continues to blow it, the share price might have further to fall. The last earnings report was even worse than expected, but the stock hasn't really been punished further - to me this indicates that some recent buyers have gritted their teeth and decided to hold on for a few quarters, while new buyers continue to be attracted by the idea of a value price on a former growth heavyweight.

    It seems like SBUX is in a position somewhat like C and BAC at the end of last year or earlier this year; all over the place you hear "ok, now that the bad quarter is out of the way let's get this earning power at a bargain price!" I know BAC looked great to me at 37, and although buyers at 37 aren't too far underwater now, they could have bought it down in the 20s with a little bit of patience. I mean, last month you could buy profitable banks at 5-10x their depressed earnings of the last few quarters. That's a value pick with some margin of safety. SBUX at 23x its depressed earnings? More of a speculative gamble (although it could pay off).     Reply
  • commenter
    Mathman
    Prophecy
    Aug 01 03:52 PM
    Starbucks on Sale (Part I) [view article]
    I had done a case study on Starbucks 6 years ago, though since then I have not revisited the company, nor have I really cared. However, one interesting finding was that each store opening infringes on other stores within the vicinity. This did result in net sales to go up, so the general effect on their bottom line was positive. The investment on each store was paid back after 3 years of operation. Nonetheless, I recall their high growth expansion plan was to achieve for 1 store per 50,000 people. That was 6 years ago. From the looks of it, they were opening stores in line with that goal, but ignored the concept of saturation. Their business model should be more inline with Coca-Cola; as they got big growth should be slow and steady. Instead, it looks to me as though they kept pursuing their high growth model.

    Instead of opening more stores, they should just have more than 1 bar inside each store. Yet management opted to change their cup logos from green to brown, give away promotions, and lock down all of the stores for 3 hours of training?! I can't help but laugh.

    Cheap? Perhaps... but I wouldn't delude myself into expectations that it will rebound to previous valuations any time soon.     Reply
  • commenter
    najdorf
    Aug 01 03:51 PM
    Starbucks on Sale (Part I) [view article]
    pearl2k: Coffee to go is a similar experience at any place that sells coffee, and a lot more people take their coffee to go than drink it in house. It looks like a lot of people drink their coffee at SBUX because the store is always full of people, but that's because of the line and the fact that laptop fools camp out like they're at their college library and use tables at which 4 people could socialize for hours of computer nonsense that they could do at home or the office. I almost always get coffee to go, so my concerns are quality, speed (counting location) and price, which are areas where anyone can potentially compete with SBUX. They have pretty good quality, speed and convenient locations. The weak spot is price. Latte/cap/frozen drinks are so much more expensive than coffee/iced coffee, and then SBUX is higher even on basic coffee.


    Stephjen: Giving away stuff is a great strategy, especially when you are introducing new products, shifting your locations, and trying to recapture old customers and bring in new ones. Every successful retailer uses some sort of give-away strategically: mail coupons at Bed, Bath and Beyond, shopper card savings at most supermarkets, samples at Trader Joe's, new product give-aways at Dunkin Donuts and McDonald's, etc. People love free stuff and will patronize places that offer it, even if they don't get free stuff every time they go. Setting aside the lost profits from those who would have paid if the product were not free (which are significant, though offset somewhat by the idea that the giveaway is a loyalty reward for regular users), the cost to give a new customer attracted by advertising a free cup of coffee is in the ballpark of 15 cents. If they come back and buy even one thing, or pick up a cookie along with their free coffee, the store is already in the black.     Reply
  • commenter
    pearl2k
    Aug 01 12:22 PM
    Starbucks on Sale (Part I) [view article]
    Why do people keep insisting McDonald's, a fast food restaurant, is competition Starbucks, a coffee house? It's an entirely different experience. I don't care how good the coffee gets @ MCD. No one, except old people, is hanging out drinking coffee there. Take a look sometime. Reply
  • commenter
    iThinkBig
    Aug 01 12:01 PM
    My Website
    July Payroll Playbook [view article]
    Agree with Alex Gabe. Big business will continue offshoring, the poor get subsidies (45% of all Americans on some form of gov't assistance) and the Middle Class are squeezed hard between inflation and lack of investment from banking and investment community. Not to mention predatory utilities and soon big tax increases (3 years out). Arnold did the right thing in California. If the party has stopped for 97% of the population then so it must for government spending. Any spending in 2009 should (and I believe it will) be spent on infrastructure such as energy, roads and telecommunications. This will create the necessary skilled jobs to prop the economy but it's a process that takes years. I repeat my forecast, next Bull market is in 2013. Reply
  • commenter
    Big Dog
    Aug 01 09:54 AM
    Starbucks on Sale (Part I) [view article]
    They can't be doing too bad up here in NH. There is a SB here in Plastow. It is always crowded. Now, they are just finishing another SB down the road from the first, about 3 miles down the road. Business must be good if they are building them that close together. Reply
  • commenter
    rootOfUnity
    Aug 01 09:21 AM
    Starbucks on Sale (Part I) [view article]
    They would attract a lot more customers if they made their wifi free like Panera Bread. Reply
  • commenter
    Randy Fay
    Aug 01 09:04 AM
    My Website
    Starbucks on Sale (Part I) [view article]
    SBUX is a value trap IMO. The key word in the last sentence is MAY. It may also continue drift lower due to continuing problems. Reply
  • commenter
    Stephjen
    Aug 01 08:39 AM
    My Website
    Starbucks on Sale (Part I) [view article]
    starbucks has given away so much free stuff over the past six months. first, free hot coffee on wednesday from like march-may, free iced on wed from may-last week, and free smoothies to card holders just last friday. i guess during a "restructuring&qu... period you can give away stuff to bring people in, but that's not a great strategy overall.

    starbucks has different competition it faces.

    mcd/7-11/sheetz for a the discount, standard coffee buyer... as other places have improved their normal brew, there's not reason for quasi-connoisseurs to go to sbux.

    peets/caribou/the neighborhood coffee shop - many places now offer a similar "experience"... once again, a smaller price.     Reply
  • commenter
    tjschoenlein
    Aug 01 03:17 AM
    Wall Street Breakfast: Must-Know News [view article]
    user155010.. and other folks who think Jim Rodgers is great?
    He has called for Frannie & Freddy to fail-uh should fail.., complaining that everyone has committed theft, fraud,etc. When ask by the interviewer if he was short these stocks he said of course. He stated yes he was making money being short but who cared if he was making money?? After all he said, "I have to pay taxes on it".. right!!
    He spends his TV time bad mouthing the stocks so he can make his money short..a nice ethical guy.
    just my view..     Reply
  • commenter
    Alex
    Sebastian
    Jul 31 10:46 PM
    My Website
    July Payroll Playbook [view article]
    Gabe, while I see your perspective and recognize it's validity, I am unconvinced that the economy is necessarily set to turn around. The stimulus checks have been spent and there is no more debt the consumer can pile up to kickstart the economy. With the average American having negative net worth, I find it difficult to see where the stimulus will come from that will restart the economy. Reply
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