Starbucks’s Earnings Disappoint, But Schultz Vows a Transformation

(NewsVisual, powered by IntellectSpace) -- As Starbucks Corp (NASDAQ: SBUX) today announced its financial results for its fiscal first quarter that ended on December 30, 2007, the news machine started brewing up speculation about the company’s future prospects.

The company posted anemic earnings for the period.

Specifically, net earnings increased a mere 2 percent from the same period a year ago, totaling $208.1 million versus $205.0 million; earnings per share for the quarter rose 8 percent to $0.28 from $0.26 in the prior year period, according to a company statement.

But Starbucks isn’t being complacent about these figures.  Indeed, the company is embarking upon an aggressive program of transformation.

For example, it plans to slow the pace of store growth in the U.S. to approximately 1,175 stores for this fiscal year, which is revised downward from the original target of 1,600 stores.  At the same time, it will increase the store opening target in International markets to approximately 975 stores, the company said.

“Over the coming months, our management team will focus on building a long-term model to realize our transformation agenda, and drive long-term shareholder value,” said CEO/President/Chairman Howard Schultz in the company’s statement.

He then added what amounted to a new Starbucks’s mission statement:

“Our actions will dramatically change the business, which will enable us to offer a renewed Starbucks Experience to our customers, while systematically building the foundation for strong, sustainable growth in fiscal 2009 and beyond.”

The markets were greeting the company’s announcement with skepticism, sending its share price down from the previous close of $19.22 to $18.65 in after hours trading (5:35pm ET).

Schultz returned to the helm at Starbucks earlier this month on Jan 8.

Clearly facing falling stock prices and stiff competition, Starbucks had to make a drastic change and fast.

NewsVisual created an IntellectSpace Knowledge Map of Schultz’s notable business connections. His past experience at Starbucks make him more than qualified to take on the CEO role, but Schultz's additional board ties and organization recognitions should go even further to boost investor confidence as he prepares to lead major changes at Starbucks.

The Knowledge Map shows that beyond Schultz’s ties to Starbucks, he has also served as a Director at a number of companies, including DreamWorks Animation, Ebay, and Drugstore.com.

Click here or copy this link into your Internet Explorer browser for an interactive version of this IntellectSpace Knowledge Map: http://nv.intellectspace.com/ispace/GuestMonitor.aspx?id=3cd16d3e-3728-4448-9729-5fb2d8e7b346