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Is There a Link Between Terrorism and Sales of Starbucks Coffee?

The Wall Street Journal had a story the other day about Starbucks’ disappointing results in Europe and the U.S. that resulted in its third consecutive sales-target miss.

While there could be several possible explanations for not hitting its sales target (changing consumer preferences, more competition, pricing, decreased quality, etc.), what was surprising were the reasons company executives gave for the problems.

The executives cited terror concerns around the world along with civil unrest and political uncertainty in the U.S. and a profound weakening in consumer confidence. CEO Howard Schultz said that he could not recall a quarter quite like this past one in the history of Starbucks.

While Starbucks certainly has access to a lot more data than I do, I have trouble understanding what impact terror, civil unrest, and political uncertainty have on coffee sales.

Perhaps such issues might have some impact, but it seems like the company is trying to blame its less than stellar results on factors outside of its control, and thus not really taking responsibility for the poor performance.

If I were a Starbucks shareholder, I would be concerned with such an explanation. If its sales truly are affected by such issues, then I would think there is little Starbucks can do to fix such problems, and I would not be overly optimistic about Starbucks’ future performance. I would have preferred to hear about problems that they can fix, such as poor customer service or a lower than expected quality of product.

While it may be harder to accept that internal issues are the main reason for the poor results, at least those are problems they can work on and there’s the hope that performance will improve in the future as a result.

I wish Starbucks the best moving forward. It will be interesting to see if sales improve next quarter, even if there is no improvement in the civil unrest and political uncertainty that now exist around the globe and in the U.S.

If that’s the case, that may be an indication that such explanations weren’t really the reason for the poor performance this past quarter.

 

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Jim Borden

Accounting Prof. at Villanova; happily married for 30+ years; father of 3 outstanding young men; vegan; interests: fitness, creativity, education, blogging, social media.

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