Starbucks to build on relationship between supermarkets and cafes
Seattle Starbucks Corp. said it is planning to use its coffee shops as a testing ground to get more products into grocery stores, according to a Thursday report by Wall Street Journal.
In a memo by CEO Howard Schultz, Schultz said he’s aiming to leverage Starbucks’s retail stores to build a stronger consumer packaged goods business.
“Our competitors are trying every angle to reach our customers, and some are executing strategic alliances that put them in a strong position. We will think strategically and act boldly to maintain and build upon our leadership position,” Schultz said in his memo.
According to WSJ, Starbucks has been encouraged by the success of its Via instant coffee, which was introduced in its coffee shops in September and is now available in supermarkets and retailers such as Target and Wal-Mart. Sales of Via have exceeded $100 million in the United States.
In addition to more Via branded products, Schultz said the company plans to introduce new Tazo tea and Seattle’s Best products first in its retail stores and then in supermarkets.
Schultz said the chain is planning to drive its coffee-shop customers to supermarkets and to bring supermarket shoppers into the coffee shops through its Starbucks rewards program.
“We will reward customers who buy Starbucks products in the grocery store with opportunities to get rewards in our stores and vice versa,” Schultz said. “That’s a sea change in our ability to integrate these two channels of distribution.”
Schultz said the coffee shops will remain the core of the company’s business.
Deloitte Consumer Spending Index down 4.45%
NEW YORK The Deloitte Consumer Spending Index fell to 4.45%, from an upwardly revised gain of 4.63% a month ago. According to the company, the Index experienced its third straight month of decline in July, due in large part to weakness in the housing market.
“American households continue to be cautious about spending while economic growth continues to be uneven,” said Alison Paul, vice chairman and Deloitte’s retail leader in the United States. “At the same time, consumers economized over the past two years and likely have pent up demand for goods they have foregone. Retailers should consider strategies to stay nimble amid shifts in consumer behavior in the months ahead. Customer data and business analytics may be particularly valuable for retailers to hone pricing, merchandise and promotions that attract their target consumers.”
Limited Brands posts earnings gains
COLUMBUS, Ohio Limited Brands reported that adjusted earnings per share for the second quarter ended July 31, were 36 cents compared with 19 cents for the quarter ended Aug. 1, 2009, which exclude certain significant items in both years as detailed below.
The company reported a comparable store sales increase of 7% for the second quarter ended July 31, compared with the second quarter ended Aug. 1, 2009. The company reported net sales of $2.243 billion for the second quarter, compared with sales of $2.067 billion last year.
The company stated that it expects 2010 third quarter earnings per share to be 3 cents to 8 cents compared with adjusted earnings per share of 2 cents per share last year. The company now expects August comparable-store sales to increase in the mid to high single digit range versus its previous guidance for a low single digit increase.
For 2010, the company increased its adjusted earnings per share forecast to $1.68 to $1.83 from $1.60 to $1.80 previously.