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Starbucks

Starbucks (Nasdaq: SBUX) is a purveyor of roasted coffee beans, fresh-brewed coffee, cold blended beverages, food items, coffee-related accessories and equipment, as well as teas, primarily at its company-owned stores.

Expanded Definition

If you live in a major U.S. metropolitan area, and you don't know anything about Starbucks, chances are good that your last name is "Van Winkle" (as in "Rip..."), or that you are an alien from another planet and have only recently landed on Earth.

Anyone not fitting those descriptions has probably at least heard of Starbucks, even if you live far from the maddening crowd. That's because Starbucks has been one of the major growth stories of the last 15 years, having gone from 165 stores in 1992, the year they became a publicly traded company through their IPO, to 8,337 stores in 2008, an average growth rate of 27% per year. In fact, some might consider their phenomenal growth to have been a catalyst to some of the difficulties the company and its stock encountered in 2007 and 2008. In some major U.S. cities, there are Starbucks stores within sight of each other. In a semi-serious tongue-in-cheek look at Starbucks and the financial collapse of the fall of 2008, Daniel Gross of "Newsweek" looked at the number of Starbucks locations in various financial capitals around the world and claimed there was a correlation between that number and the severity of the hit that city's country took.

Love 'em or hate 'em, there is no denying that Starbucks' iconic mermaid logo is a retail fixture.

Howard Schultz

The company started life as a single store in 1971, in Seattle's Pike Place Market. Howard Schultz, the company's current CEO, did not come on the scene until 1982, when he was hired as director of retail operations and marketing of Starbucks Company, the predecessor of the current company. In 1985, he co-founded the current company and served as Chairman and CEO for 15 years. In 2000, he left to pursue other interests. In 2008, he was asked to return to the struggling company.

Losing the growth and working a turnaround

After more than 14 years of a relentless march upwards in company size and stock price, the company's stock price reversed that trend in late 2006. Within two years, it had fallen nearly 75% from its all-time highs as year-over-year growth slowed and competition from McDonald's (NYSE MCD), Tim Horton's (NYSE: THI), and Dunkin' Donuts (private) heated up. The idea of having Starbucks stores within sight of each other no longer seemed like such a great idea and in the spring of 2008, year-over-year net income growth actually turned negative.for the second time since early 2002, the first time being the fall of 2006. At about that time, Howard Schultz returned to the job of CEO.

In the summer of 2008, the company announced that it would start closing stores, particularly many of the most recently opened ones. The company has also halted sales of many of its food offerings in an effort to return to its roots as a coffee-house. As part of that initiative, in the spring of 2008, the company purchased Ballard, Wash.'s The Coffee Equipment Co., maker of the Clover drip-coffee maker, which the company had been selling for $8,000 each to coffee retail outlets. The Clover is slowly appearing in all but the smallest Starbucks locations.

People

  • Howard Schultz - Founder, Chairman, President, CEO
  • Peter J. Bocian - Chief Financial Officer, Chief Administrative Officer
  • Martin Coles - President, Starbucks Coffee International
  • Cliff Burrows - President, Starbucks Coffee U.S.
  • Arthur Rubenfield - President, Global Development

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