For the first time in its history Starbucks revealed the number of visits to its established U.S. stores fell. What does this say about consumer spending?
While sticking to its ambitious goal of having 40,000 stores worldwide, Starbucks plans to open 100 fewer U.S. stores in fiscal 2008 than originally forecast, one of several moves aimed at improving operations. And in an effort to improve sluggish traffic Starbucks has outlined it’s first ever nationwide TV ad campaign.
“It’s going to take more than ads,” said Jeff Macke on CNBC’s “Closing Bell” “I think this is a classic example of a multiple contraction story. This is the other side of the mountain in terms of specialty retail.”
He adds, “Starbucks looks to me like the Gap in 1998 where they really changed the face of the way people consume a good or service.. but that act is over. The warning shot has been fired.”
In terms of how to play it maybe you can dive in and out, but in the long term I think this stock is going lower. Perhaps as low as the teens.