Evidence that the freemarket and capitalism might not redeem all the ills of the world.
Starbucks will shut down 600 of its U.S. coffee shops
Wednesday July 02, 2008
From now through next March, Starbucks Corp. plans to shutter 600 of its underperforming U.S. coffee shops and open fewer stores than planned.
Why: A slowing U.S. economy is dragging down the Seattle company's results. Starbucks has been hurt by subprime mortgage fallout in California and Florida, which account for nearly one-third of U.S. retail sales. The company said U.S. operating profit in fell 27.5 percent in the quarter ended March 30 from the year before.
Starbucks' wildfire U.S. growth also is coming back to haunt it. Up to 30 percent of a shop's revenue is cannibalized when another Starbucks opens nearby. About 70 percent of stores slated for closure opened since fiscal 2006; they make up 19 percent of U.S. company-operated stores opened then.