Today Starbucks (SBUX: chart, web, Y!) announced that they will be closing 600 stores in the next year.  The company originally proposed shutting doors on just 100 stores, but it seems the struggling U.S. economy has increased the need to trim the fat… er, the froth.

The company said that the additional 500 stores due for closing were not profitable, nor were they expected to be profitable in the foreseeable future.

One other interesting feature about these additional 500 stores is that they had been opened (all as recently as 2006) in close proximity to existing stores.  (The closest Starbucks to my house is also within 1.5 miles of the next-closest Starbucks…)

I wrote about Starbucks’ trouble back in April of this year, and at the time, they were trading around the $16 mark just before estimates.  While I predicted they’d miss earnings, they actually came right in line with the $0.15 per share consensus on the street.

Personally, I believe Starbucks delivers one of those feel-good luxury products that is grossly overvalued, and when the belt tightens, the five dollar coffee is the easiest habit to toss down the drain.

What do you think the future is for Starbucks? Can they still sell expensive coffee in a recessionary market?

Investing SBUX

Starbucks (SBUX: chart, web, Y!) has been making valiant efforts in marketing to combat the effects of cheaper coffee shops and gourmet coffee-selling fast food chains.  But they’re coming up short.

I could smell this one coming from miles away (pardon the pun).  The first thing to suffer from a falling economy is the discretionary purchases that have become most routine.  When you first start looking at your budget and ask yourself the question: “where can I save a few bucks here and a few bucks there?” the answer is easy.  You could quit spending $5 on a cup of coffee!

I remember when coffee was complimentary with any meal, and you could buy a cup of joe with all the fixin’s for less than $0.25 and usually for a dime.  That was then, this is now.

Starbucks business model is very focused on coffee, although they have branched out into light pastries and quick gourmet snacks.  But the focus is still on coffee.  Expensive coffee.

I only frequent Starbucks when I travel.  They have quick kiosks right next to the gates at the airport, and generally my travel schedule dictates that I arrive for the earliest of flights to where ever I’m going. Most restaurants aren’t open that early, but Starbucks has the brew going strong (again… the pun) before I’ve arrived.

The problem is that I just want coffee.  Plain old black coffee.  No mocha-lotta-cappa-whatever… just coffee.  I usually end up getting a blank stare from the barrista (er… whatever they call the guy who pours the coffee) for wanting “just coffee” but then after shelling out nearly $3.50 for “just coffee” I make my way to the gate.

I digress.

Starbucks is in trouble.  We’ll find out just how much trouble on Wednesday when they report earnings.  Analysts are predicting an EPS of $0.21, which is just $0.02 more than a year ago.

I’m not a gambling man, but I bet SBUX misses estimates.

Investing coffee, SBUX