SBUX – MANAGEMENT CHANGES ARE A SIGN OF THE TIMES!

Yesterday, the London Times reported that Starbucks UK and Ireland managing director Phil Broad has resigned. According to the company, Darcy Willson-Rymer, VP of Starbucks Europe, Middle East and Africa, will assume his position. This is not healthy sign for SBUX, and is clearly a sign of the times. Relative to the news flow over the past two weeks, management changes should not come as a surprise.

Consider the following time line:

July 29th - Starbucks Coffee International Inc. appointed Martin Coles as president, replacing Jim Alling. Martin Coles was the COO of Starbucks Corp. The COO position was eliminated.

July 30th SBUX 3Q08 EPS conference call - “I think we want to be very cautious. I think there are signs in the U.K. that are difficult to predict, but there are signs that remind us of what happened here in the beginning of ‘08, and those signs kind of bode downward in terms of consumer spending. We want to be very careful, and in markets like Spain and Greece, specifically in Spain, they are experiencing a very, very tough economy, and in view of that, we want to be as cautious as possible and not over-expand at a time when the consumer may be under significant pressure. But offsetting that, the openings in the last six months or so in Brazil and Argentina, the ongoing success we’re enjoying in Mexico, and although it’s only six stores in Russia, there’s a lot of places where we can make that up. We’ll just see how the year goes.

Aug 8th - Phil Broad, the Starbucks UK and Ireland managing director, has resigned less than a week after he assured The Times that difficulties facing the coffee shop chain in America and Australia had not spread to Europe.

Martin Coles is one of Howard Schultz’s key executives and his return to Starbucks Coffee International Inc. was a disappointment to Phil Broad, if not the end of the road for him.
Martin Coles