Starbucks: In Trouble, But Still a Way of Life

I was going to profile another company this week, but I recently heard that Starbucks (NASDAQ: SBUX) and a few other coffee joints are doing some sort of special this week (at least in Canada).  Starbucks, for example, is giving away free coffee on Earth Day (April 22) to anyone who brings his or her own mug.  Hence, I thought it is timely to do a profile on Starbuck.

The first Starbucks opened in Seattle in 1971 but didn’t expand further east (or north of the US border) for a number of years.  In fact, the first Starbucks outside of Seattle didn’t open until 1987, when it launched stores in Vancouver, BC and Chicago, Illinois. 

Starbucks is known for not only being a cafe where one goes for his or her morning java, but also being a way of life – one can probably spend an entire day at Starbucks and not realize that hours have gone by.  Starbucks cafes have Wi-Fi services and one can just find a table in a corner and surf the net all day on their laptop.  It can be sort of a second home or second office for many.

Because of the economic downturn, Starbucks has run into some trouble in the past few months.  In the US, approximately 900 cafes have closed or are slated to close.  However, they seem to be keen on opening cafes in international locations – another 900 will be opening around the world. Starbuck management must believe that overseas locations provide greater growth opportunities.

In addition to cafes, Starbucks also sells drinks outside of its cafes.  For example, one can find bottles of Frappacinos at convenience stores and supermarkets.  However, these drinks look (and taste) NOTHING like the Frappacinos sold at the cafes.  Instead of an icy texture, the bottled drinks are watery.

On Tuesday, April 21, Starbucks opened at  11.21 and closed at 11.81.  Its 52-week highs and lows were 18.56 and 7.06.