FINANCE

Starbucks prices $750 million of senior notes

BY Dan Berthiaume

Seattle – Starbucks has priced an underwritten public offering of senior notes. The company plans to use the net proceeds from the offering of $400 million of 0.875% senior notes due 2016 and $350 million of 2.000% senior notes due 2018 to fund a portion of the payment required by the previously announced arbitration award in the Kraft litigation matter.

The remaining net proceeds from this offering will be used for general corporate purposes, which may include business expansion, payment of cash dividends on Starbucks common stock, the repurchase of common stock under the company’s ongoing share repurchase program, or financing of possible acquisitions. The offering of the notes is expected to close on Dec. 5, 2013, subject to customary closing conditions.

BofA Merrill Lynch, J.P. Morgan and Morgan Stanley are serving as the joint book-running managers of the offering. The offering is being made under an automatic shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (SEC) on September 3, 2013.

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MARKETING/SOCIAL MEDIA

Study: Millennial, Boomer shoppers have similarities

BY Dan Berthiaume

New York — There are significant similarities between Millennial and Boomer shoppers. A study of Millennial and Boomer purchasing trends conducted by Radius Global Market Research shows that while there are certainly differences, there are also significant similarities between the groups.

Top Similarities: Millennials versus Boomers

New media and technology are not just for the young. An overwhelming number of both Millennials (90%) and Boomers (86%) routinely research products online. Boomers and Millennials are both engaging via social media at healthy rates. Female Boomers and Millennials use Facebook at a nearly identical rate (90%). And streaming movies and television programming is a reality for both Millennials (77%) and Boomers (40%).

Millennials and Boomers have similar concerns when making purchases. Both focus primarily on quality or price/value, depending on the category.

Millennials and Boomers have the same habits when it comes to where they shop. Retail is the prominent channel for buying most everyday packaged goods, apparel, and electronics.

Top Differences: Millennials versus Boomers

Millennial consumers are more optimistic. They have a more favorable outlook on the economy (71%) and were more apt to maintain/increase spending during the recession (55%).

Millennials and Boomers have different buying priorities. Millennials place travel and apparel as their top two priorities for increased spending in 2014. Boomers are more focused on "necessities" like packaged foods and insurance.

Boomers and Millennials access product information differently. While product research via PC is high with both groups, 60% of Millennials research via smart phone (versus only 14% of Boomers). Boomers are twice as likely (at 38%) to research in newspapers or magazines.

Word-of-mouth sways Millennials. The younger consumers rank word-of-mouth most influential as they make purchase decisions across all categories. Boomers tend to rely on advertising and advice from sales reps.

"While it is beneficial to understand the similarities and differences between generational groups, it is also important for marketers to look beyond these over-arching categories," said Radius GMR senior VP Lesley Brooks. "Nuances such as gender require at least as much attention when it comes to engaging both Boomers and Millennials."


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FINANCE

Engaged Capital suggests new direction for Abercrombie

BY Dan Berthiaume

Newport Beach, Calif. — Engaged Capital, an investment firm specializing in small and mid-cap North American equities and beneficial owner of approximately 400,000 shares of the common stock of Abercrombie & Fitch Co. sent a letter to the company’s board of directors on Dec. 3. In its letter, Engaged Capital highlighted the upcoming expiration of Abercrombie chairman and CEO Michael Jeffries’ employment contract on February 1, 2014 as an opportunity for the board to set a new direction for the company.

Engaged Capital also expressed its concern that no qualified successor appeared to exist at Abercrombie, and noted that continuing on the present course under the leadership of Jeffries would further cement the loss of shareholder confidence in the board.

“Investors in Abercrombie have endured poor performance due to poor leadership for far too long,” said Glenn W. Welling, principal and chief investment officer of Engaged Capital. “The board needs to come to the same conclusion that everyone else already has – it is time for new leadership at ANF. The renewal of Mr. Jeffries’ employment contract would be a direct contradiction to what shareholders want and the company needs. ANF’s future success will be dependent on the company’s ability to adapt to a fast changing retail environment, carefully manage expenses, and efficiently allocate capital. We urge the board to immediately commence a CEO search for candidates with relevant retail apparel and turnaround experience or consider a sale of the company.”

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