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Thread: As goes Starbucks and Home Depot, so goes the nation

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  1. #1
    Join Date
    Mar 2006
    Boston, Mass.

    Default As goes Starbucks and Home Depot, so goes the nation

    Starbucks Cuts Earnings Guidance As Per-Store Transactions Fall
    November 15, 2007 (JANET ADAMY and MIKE BARRIS - WSJ)

    The amount of traffic flowing through Starbucks Corp.'s U.S. stores fell during the fourth quarter for the first time since the company began disclosing the figure three years ago – a sign that the Seattle coffee giant is having a more difficult time attracting customers as it moves into the holiday season. The company also reduced its earnings estimates for the coming year.

    AntiSpin: Back before the US economy became a "service" economy, when Dwight Eisenhower was President it was said: “As goes General Motors, so goes the nation.” Now if you're looking for confirmation that the housing sector dependent and service based US economy is slowing hard, you look to the bellwethers of each: Home Depot and Starbucks. Yesterday Home Depot Inc. posted a 27 per cent drop in third-quarter profit and forecast a steeper fall in full-year earnings. Reuters reported, "Results at Home Depot and rival Lowe's Cos. Inc. have weakened as slowing home sales and sliding house prices led consumers to curb big-ticket projects." Today Starbucks says over-priced coffee is getting harder to sell, too. Back in its rapid growth days, a $2 latte Starbucks was competing with $1.50 regular gasoline. Now a $3 latte competes with a $3 gallon of gas. Meanwhile wages have hardly budged. Something's got to give.

    Maybe the problem is that Starbucks over-expanded. Service companies tend to do that going into recessions.
    Last edited by FRED; 11-21-07 at 07:19 PM. Reason: Well, looks like it isn't going to be updated. Moving on...



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