Starbucks' Lesson for Wall Street


Starbucks' CEO Howard Schultz

Starbucks plan to close 600 stores across the county come as a sobering shock to anyone who has watched its exponential growth over the years. But there’s something gratifying about it too. It’s not that I view Starbucks as the evil empire; I’ve never bought into the vilification of a company that in many ways has striven to treat workers and farmers right. What I applaud is the antidote to Wall Street’s longtime obsession with growth. Especially evident during the tech bubble, it has been standard operating procedure for the suits in New York to demand that companies show ever more profitability -- no matter how much money they are already making. This has had a devastating effect on some industries -- the newspaper business among them -- where healthy profit margins are viewed as inadequate and papers are forced to slash costs. In other industries, companies expand beyond their means to show a plan for growth. One can only hope that Starbucks’ contraction offers a lesson in the foolishness of growth for the sake of growth alone.

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