Hard to believe it but times ~are~ really tough all over. The recession is officially here. Starbucks, the august purveyor of caffeinated milk drinks and wifi, has seen its fourth quarter profits fall 97%.
Seattle-based Starbucks said profit in the quarter fell 97 percent to $5.4 million, or a penny a share, from $158.5 million, or 21 cents per share. The coffee retailer earned 10 cents per share when the costs from closing about 600 stores in the U.S. and 61 locations in Australia are excluded….
Starbucks began shutting the U.S. and Australian stores this summer as part of its nearly yearlong campaign to reverse slowing sales and falling profits at the company. Besides closing the stores, Starbucks has cut more than 1,000 positions — many of which were unfilled — and introduced a slew of new products, including Vivanno smoothie drinks and breakfast pastries.
The company also replaced aging espresso makers, launched new single-cup Clover brewing machines in some markets, retrained baristas and began a loyalty card program to offer customers more value for their cup.
But all the changes did little to boost sales in the fourth quarter, particularly in the U.S, where the turmoil in the economy took a gulp out of consumer spending.
I am sorry that I never had the opportunity to try their new single-cup Clover brewers. But then again, I am not interested in buying many $4 cups of black coffee, no matter how fabulous.
I regret this news as I believe places like Starbucks do a social service (in the name of their own profits, I’ll grant you) by creating comfortable public places to relax during the day. We could use more places to relax, have a rest and a cup of joe and it looks like fewer of those places will be a Starbucks. Peets? How are they doing?
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