Starbucks shares could perk up 30 pct-Barron's
NEW YORK, Sept 28 (Reuters) - Starbucks Corp (SBUX.O) shares could rise 20 percent to 30 percent within a year as the coffee chain overhauls its menu and slashes costs, Barron's said in its Monday edition.
Chief Executive Howard Schultz is trying to re-energize the chain after a decade-and-a-half of rapid expansion led to its many stores stealing sales from each other, and prompted rivals such as McDonald's Corp (MCD.N) and Dunkin' Donuts to roll out competing products, often at lower prices.
In July, Starbucks reported a $6.7 million fiscal third-quarter loss, its first loss as a public company.
It also set plans to close 600 U.S. stores and eliminate as many as 12,000 full- and part-time jobs, though it is ramping up international expansion. In New York, it is common for Starbucks stores to be within two blocks of each other.
Sales have been under pressure as the nation's housing slump deepened and gas prices began to soar, causing some consumers to look for cheaper alternatives to a $2 to $5 daily Starbucks caffeine fix.
This month, Starbucks has been introducing healthier breakfast fare such as oatmeal, apple bran muffins and multigrain rolls. It has also this year rolled out a new regular drip blend, Pike Place Roast, and begun selling Vivanno smoothies and an icy drink known as Sorbetto.
Starbucks brought back Schultz, its founder, in January to turn around the company.
He told Barron's that Starbucks plans to unveil a new card program that will "surprise and delight" customers, without providing details. He also believes Starbucks can win market share from customers of McDonald's and other rivals that want more of a "coffee experience" when they need a caffeine buzz.
"We have the resources and the tools to execute on a well-thought-out plan," he told the newspaper.
Starbucks shares closed Friday at $14.96 on the Nasdaq, 63 percent below their record high set in Nov. 2006, Reuters data show. Analysts on average expect fiscal 2009 operating profit of 89 cents per share, according to Reuters Estimates.
If Starbucks shares were to rise 30 percent, they would reach a level last seen in January. (Reporting by Jonathan Stempel, editing by Maureen Bavdek)
