Starbucks announced it will close down more than 100 stores in the US to optimize current resources. Faced with stiffer competition, reported transactions at its US stores fell 3% from a year ago for the quarter ended Dec. 30, 2007. It reported a fiscal first-quarter net income of only US$208-million, a measly 1.5% increase from its net income of US$205-million a year ago.
The company's characteristically high growth rate is somewhat showing marks of fatigue. Shares are down 43% over the past year. The coffee chain has been battered in recent months by slower consumer spending, higher milk prices, and concerns it may have saturated the US market. [It seems that the coffee chain is suffering not only from external competition, but also from “cannibalization” or internal wrangling among its outlets which eaten up the company's share of the market pie. - The Chronicler]
Yet the company, according to some reports, are still eyeing to reach its goal of having 40,000 stores worlwide. It opened 745 new stores worldwide in the latest quarter of 2007, boosting its worldwide store count to 15,756. [In the Philippines, Starbucks is still leading the way. In fact, some of its stores that are located in not-so-affluent places are still selling like hot cakes. And the Starbucks' franchise in the Philippines is solely owned by shopping mogul Rustan's. - The Chronicler]
It is quite interesting to know that the Seattle-based company, following its rapid growth throughout the 1990s, changed its strategy this decade, feeling more like a fast-food chain as it served breakfast sandwiches, sold music, and opened drive-thru windows. Meanwhile, leading fast-food chain McDonald's, through its Mc Cafe outlets, has steadily moved onto Starbucks' turf during the past year, selling new coffee at lower prices than Starbucks', and installing coffee baristas.
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