We know that coffee giant Starbucks (SBUX) was planning to shut down several stores as part of its revitalization efforts. But what proved unexpected was the speed at which it would carry this plan out. Downsizing processes seldom happen rapidly; there are going-out-of-business sales and the like, or at least advanced notice. But reports say that Starbucks’ store closures are proceeding with almost alarming rapidity. Shareholders seem a bit concerned as well, as shares slipped fractionally in Wednesday afternoon’s trading.
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The stories are coming in from multiple sources. A report from the New York Post described how “dozens of high-profile locations” in New York City were closed almost at once in a downsizing effort described as “chaotic.” The move, the Post report detailed, is “…sparking chaos for employees, city officials and landlords alike.”
Fully 54 locations throughout all five boroughs was shut down, including locations like Greenwich Village and the Upper East Side. One landlord—Jeffrey Rossman, vice chairman of Newmark Retail—noted, “They literally put signs in windows overnight without telling landlords and building managers. There was no warning, no heads up.”
Curiouser and Curiouser
But New York was not the only place where such odd phenomena took place. A report out of Rutland, Vermont noted that a Starbucks location that had only recently opened was also hit with a shutdown effort. The logo had been “bagged over” as workers were spotted removing signage and other things.
Word also got out about the severance package Starbucks was offering for all those displaced workers. Baristas would get 60 hours of pay each, while shift supervisors got 84 hours. Cafe attendants—the folks who clean up and organize things—get 30 hours following their layoffs. While most states do not require severance for part-time workers, full-time employees may be covered under certain federal rules.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, six Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 12.33% loss in its share price over the past year, the average SBUX price target of $102.21 per share implies 20.98% upside potential.
