Starbucks' (SBUX) plan to right their ship got bolder yesterday, as they upped their previously-stated plan to shrink the company. Instead of closing 100 stores, they will close 600 stores and lay off 12,000 employees.
It will be interesting to see how the transition goes and whether they can pull it off. SBUX has only ever been a growth company. Growing quickly is difficult, but can mask a lot of sins and imperfections. SBUX's revenues have nearly tripled since 2002 without a down year.
SBUX has close to 6,800 stores in the U.S. Is it true that a few hundred are unprofitable and the rest can chug along just fine, or has their stranglehold on the expensive coffee market weakened? It's possible that tastes have changed.
There are two issues in my opinion. Can management shift from prioritizing revenue growth to prioritizing profitability? Have U.S. consumers had their fill of SBUX?
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