This from a hedge-fund manager who just returned from a Starbucks (SBUX) analyst meeting:
[A] poignant moment was when CEO/Founder said one day a few weeks ago the numbers from Florida were so bad he couldn’t believe them. So he got on an aeroplane and went there. These “neighborhoods” are studded with empty houses, foreclosed signs, half finished developments. The only people in the area are the baristas working in the little Starbucks! He said it looks like a movie lot.
30% of Starbucks’ revenue and profits come from Florida and California.
To their credit, I think they really get it and will cost cut their way to make decent money with lower traffic and 10% + unemployment. But it’s nasty out there.
Meanwhile, Starbucks’ CFO reported the consolidated news:
AP: The chief financial officer, Troy Alstead, said that same-store sales deteriorated by 9 per cent in the United States since the company’s fiscal first quarter began at the end of September. In its fiscal fourth quarter, the company reported a decline of 8 per cent in the United States — a drop that many investors had hoped would be the company’s steepest.
Sales have been particularly dismal in those states hardest hit by foreclosures, most notably in California and Florida, which make up about 30 per cent of the company’s store base.
The comments came during an analyst conference that began with Mr. Schultz trying to curb anxiety on Wall Street about the chain’s sliding sales and profits.
He said he had confidence that “when, not if, this environment does get better that Starbucks is going to be a stronger company for having gone through it.”