Starbucks to Slash U.S. Store Openings
Los Angeles Starbucks Corp. said on Wednesday it would slash store openings through 2011 as it adjusts to slower U.S. growth and turns its focus to expanding newer international markets, according to a Reuters report.
The company, which warned last week of the worst economic environment in its history, blamed the domestic housing crisis for a significant quarter-over-quarter deterioration in U.S. customer traffic and said it saw early signs of a potential traffic slowdown in the United Kingdom, which may be related to economic problems there, the report said.
Chief Executive Howard Schultz, brought back in January to lead a turnaround of the company, continued to dismiss fears that Starbucks was overbuilt or that new competitors like McDonald’s Corp. were stealing customers.
The U.S. mortgage meltdown has left customers with less to spend, he argued.
“We strongly believe it is not the competition … We don’t believe that we’ve saturated the market, but we do believe that we have a head wind the likes of which we’ve never seen,” Schultz told analysts in a conference call.
On Wednesday, the chain posted fiscal second-quarter net income of $108.7 million compared with $150.8 million a year earlier.
Total revenue rose a smaller-than-expected 12% to $2.53 billion, after same-store sales at U.S. stores open at least 13 months fell in the mid-single digits.
Starbucks’ U.S. stores delivered 77% of total revenue and experienced slower traffic during the quarter.
OfficeMax 1Q sales fall on weak economy
NAPERVILLE, Ill. OfficeMax announced that for its first quarter ended March 29, total sales decreased 5.5% to $2.3 billion compared to the first quarter of 2007. Net income increased in the first quarter of 2008 to $63.3 million, or 81 cents per diluted share, from $58.5 million, or 76 cents per diluted share, in the first quarter of 2007.
OfficeMax Retail segment sales decreased 5.5% to $1.11 billion in the first quarter of 2008 compared to the first quarter of 2007, reflecting a same-store sales decrease of 8.7% partially offset by sales from new stores. Retail same-store sales for the first quarter of 2008 declined across all major product categories due to weaker U.S. consumer and small business spending and the negative impact of the Easter holiday occurring in the first quarter of 2008.
IKEA to open first U.S. manufacturing facility
DANVILLE, Va. IKEA, through its subsidiary Swedwood, announced that it will open its first U.S. furniture manufacturing facility on May 21 in Danville, Va. The 930,000 square-foot Swedwood factory will produce a variety of wood-based IKEA products, the company reported.
“We made excellent progress on construction last year and our installation of equipment and machinery has gone very smoothly,” said Bengt Danielsson, North American president of Swedwood. “Now our primary objective is to complete appropriate operational training for 175 coworkers as well as to ensure a seamless production and packaging process.”