Starbucks (NASDAQ:SBUX) has been slashing its way to profit. In a sign that its turnaround is turning out well, the company took nearly 30 stores off its "death list" of slated closures.
The coffee giant's chief financial officer, Troy Alstead, shared the glad tidings at the Goldman Sachs Global Retail Conference. He said Starbucks has been able to improve the profitability at those stores, and that they even started contributing to the company's fortunes. Cost-saving strategies included wasting less coffee and milk, tinkering with employee scheduling so that it's more efficient, and renegotiating rent for some of the stores.
Granted, we're talking about a minuscule number of cafes compared to the nearly 1,000 locations Starbucks had planned to close, but the survivors represent a glimmer of hope. There is a solid argument that once Starbucks emerges from these difficult times, it will be a much leaner, meaner company operationally.
It'll need that edge, given the rivalry it faces not just from close cafe rivals such as Peet's (NASDAQ:PEET), Caribou Coffee (NASDAQ:CBOU), and mom-and-pop coffee shops, but also from fast-food giant McDonald's (NYSE:MCD). It's even under siege from Green Mountain Coffee Roasters (NASDAQ:GMCR), which offers gourmet coffee and Keurig coffee makers for people who sip their java at home.
These may be glad tidings for Starbucks, but I remain cautiously optimistic. I still worry that some of its recent initiatives could cost Starbucks its soul, as company founder Howard Schultz has occasionally feared. Our poll revealed that a daunting 45% of Foolish respondents already think Starbucks is no different from any other corporation. And if the company gets too zealous about cost-cutting, the brand could die the death of a thousand cuts.
For now, though, a reduction in the store death list -- especially because of significantly improved profitability -- is a heartening sign of life for the coffee giant.
