While Starbucks (NASDAQ: SBUX) profits fall, plans for store openings are cut and fiscal year outlook looks dim I’m proud to be a shareholder.
Saturation and overbuilding of stores in the U.S. has not only caused profits to fall, but has made investors nervous. Analysts feel the brand is diluted and the company has hit a plateau, dismissing it only as neutral. Growth has been deemed as public enemy number one and competition is supposedly challenging Starbucks market share.
Why do I still want Starbucks?
Starbucks has the influence, the cash and the brand power to cross into international markets far faster then any other company when it comes to consumer goods.
The direction for Starbucks is no longer about domestic growth, and Starbucks has the potential of making a higher profit (and winning over investors and analysts alike) by going global. The cost of going into a new market has a much higher return on investment then opening more stores in an already saturated market which ‘cannibalizes’ same store growth.
I have always been a major supporter of Starbucks and I think all the signs point for a turnaround, even if it won’t come in this fiscal year. Starbucks has a long road ahead of them, it will take years to regain ground and drastically change the direction of the company. Even with all the Transformational Initiatives and New Promises it’ll take a little bit more effort to convince Wall Street they’re serious about change.
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