Starbucks Earnings……Who Cares?

so, Starbucks (SBUX) reports later today……should we expect anything good? That depends.

Estimates are for 15 cents a share, below the 19 posted last year. Starbucks will miss that. 600 locations closed are not enough and now we have International locations, once the “future earnings growth driver” being shuttered.

In addition to those losing their jobs at the 600 locations being closed, 1,000 people just got notice they are being allowed to “pursue other opportunities“. There will be more. Schultz said the problems in Australia “are unique” and will leave 23 stores there open.

The COO position is being eliminated and Internationl President Jim Alling has left the company and Martin Coles is the new President of Starbucks Coffee International.

How is any of this “transforming the brand”? Isn’t this what we have been hearing?

It seems to me like Howard is running around out there chopping heads. Here is what is happening. this quarter is going to be abysmal. These moves will allow Howard to say on the earnings call, “recent actions will save us “x” per year”. This will make it look like things are going to get better. Howard will also take the charges this quarter so as to hide the terrible operating performance he will turn in. It will be a convoluted earnings release in which the losses will be made to look like the results of “one time charges”.

Starbucks has been less than forthcoming with investors up until this point, no reason to expect anything else now.

Now if Howard could just find a way to get people to stop leaving him for McDonald’s (MCD) and Dunkin’ Donuts, that would be something.

Oh yea, the “that depends” at the beginning? The good news would be of you are a short….wish I was..

Disclosure (“none” means no position):Long MCD, None

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