Starbucks Tells Walmart:: "Here, You Take Them."

More great news from our wonderful service economy - a new slew of 12,000 potential Walmart (WMT) workers have just been borne. Lucky us. Of course these people will disappear into the ether of the "new jobs" created by the birth/death model in our monthly BS, err BLS unemployment report. (Newest chapter of this fiction available Thursday - hot off the presses.) Within that report these people will be shown as newly employed in contruction trades, finance, or services - some of our hottest groups for job creation (no, I am serious - the government has been showing growth in construction and finance in its estimates).

As always folks, I do not comment on this monthly report other than realizing it will create lemming-like behavior by the hedge fund computers and NYC traders. Every 30 days I just point new readers to this [May 2: Employment Report] Read point #1 and point #2 in that blog post, and then ignore the spiel that gets spit out every 30 days. As always, listen to the companies - not the government. Let's hear what Starbucks (SBUX) is saying.

• Starbucks Corp (NasdaqGS:SBUX - News) said on Tuesday it plans to close another 500 underperforming stores and eliminate as many as 12,000 full- and part-time positions, lifting shares nearly 6 percent. (if you are new to the market this might sound perverse but all the market cares about is lower costs. Less people = lower costs. That's as simple as I can make it.)
• The company, which now plans to close a total of 600 underperforming stores versus its previous estimate of 100, said the majority of the stores will be closed by the end of March 2009.
• The job losses would represent about 7 percent of the company's global work force.

Frankly I cannot keep track of all the announced job losses anymore - whatever the aggregate amount is. It really doesn't matter - I'll just rely on what the government says and call it even. Works for everyone else.

In a greater sense and speaking to one of our long held themes - pooring of America - once again I ask you to please avoid any company (other than the oversold bounces that should be coming soon in retailers as overstuffed shorts are finally forced to cover and book their huge gains) directly relying on the bottom 80% of US consumers overspending of the past 15 years - i.e. $4 lattes.

[Apr 23: Consumers Fleeing Starbucks; Still Love Chipotle (CMG)]
[Jan 8: Is Starbucks (SBUX) a Buy?]
[Sep 5: Starbucks Warns on Higher Commodity Costs - this time Dairy]

Disclosure: No positions

Comments

[malachhamovess]

in the long run, paying a whole bunch of people to pour coffee for 2 hours a day while sitting around and comparing boyfriends & girlfriends the rest of the time does very little for the economy

[jerico]

Well Trader Mark, you are probably right. Wal-Mart probably will create many times more than the 12,000 jobs lost by Starbucks. Good thing for those Baristas!

By the way, a little research will show Walmart has a huge staff of professional trades as well; Legal, Accounting, Medical, Marketing, Engineering, etc. Little place called Bentonville, Arkansas. Their website has hundreds of openings for these positions.

They take them all from high school dropouts to PHD's and give them an opportunity. What a horrible thing.

[firboy4]

Very good article, in that I agreee with you. And it really doesn't take studying to figure out that when SBUX fires 12,000 people and closes 600 stores, that our economy is going down.

By the way, anyone remember Walmart's old "made in U.S.A" advertising years ago? Well, now I really am feeling like blaming Walmart for leading the way to forcing everyone to use China as their supplier. I'm sure that Walmart didn't just follow the lead of others of going to China to be the low price leader. They started the whole thing and it has ruined us. I don't shop there at all anymore.

I don't buy my coffee at SBUX either. I enjoy the much less expensive and every bit as good coffee at either a local coffeehouse or at home, where I don't pretend to be an intellectual. If you know what I mean, you know that people who've been frequenting SBUX are there just as people posing as either the idle rich or as some sort of fashionable revolutionary book reader. If they are so smart, why are they buying lattes at around 5 dollars? (Actually I don't know what the cost for a latte is.)

Anyway, I might buy some SBUX on Monday, but it won't be the coffee. It will be the stock, and then I'll use the money to buy coffee in bulk and just watch birds in my back yard.

[MAXWELLHOUSE]

I AM A STARBUCKS COFFEE FAN..FOR A $2 VENTI,I GET A GOOD COFFEE KICK..I LOOKED AT DUNKIN DONUTS AND IT WAS $8 PER POUND..HOPEFULLT SBUX WILL GET ITS ACT TOGETHER SO THE "INTELLECTUALS&qu... "DUMMIES"CAN GET A GOOD DEAL..

[MAXWELLHOUSE]

STARBUX IS A GREAT COFFEE W POOR MGT AT THIS TIME BUT IT WILL GET BETTER..STARBUX DRINKERS ENJOY COLORING BOOKS TOO..

[jmywhsprs]

I have faith in the company. I have worked the gamit of low-level college jobs in my life. Starbucks is by far the best enviroment I have ever been exposed to in the workforce.
With that said, I believe that the company will prevail and exceed expectations for two reasons:

1) THEY HAVE A SUPERIOR PRODUCT!


and 2) Them business development plan of Starbucks is its strength. This slight detour was due soley to a maverick CEO's direction (or lack thereof) when Schultz stepped down. Now he's back and putting the stop to the digression of company standards that Jim Donald created.


P.S. I am an employee of SBUX and do see a shit ton of pretentious, pseudo-intellectuals. But, I also see them everywhere else. Their taste in coffee almost makes up for their lack of integrity.