Formal education was a lower priority for Donald himself, who enrolled in five schools in 15 years before earning his undergraduate business degree from Century College in Albuquerque. By 19 he was an assistant manager at the Albertsons chain, owned a house and was making more than his father had ever made as a schoolteacher. He started as a 16-year-old bag boy at a Publix chain store in Tampa, Florida. In Donald's previous life such growth would generate rejoicing. This month, after Starbucks announced that the growth in sales at stores open at least one year had declined to 7% from 12% in the previous comparison, the stock dropped 7%. Investors, who at $50 a share value the coffee chain at 48 times trailing earnings, have been conditioned to expect ever-improving performance. Along the way it intends to maintain annual revenue and profit increases of at least 20%. Last fall Starbucks boosted its target for ultimate store count by 20%, to 30,000 (though that target doesn't come with a date). (Last year Starbucks' international stores, which have struggled, posted their first profit, buoyed primarily by successful units in the U.K. that boasts that its customer base is becoming less affluent. Starbucks may be the only consumer company in the U.S. And though Schultz insists the upscale neighborhoods where Starbucks first made its mark are still not saturated, the company is also building stores in places you wouldn't have expected a decade ago: in small towns, near highways and in poorer neighborhoods. It's decelerating-this year it will add 1,500 locations, a much slower pace of growth in percentage terms-but that's still 4 new stores a day. In 13 years the chain has exploded from 165 outlets to 9,000. Schultz remains a highly visible chairman, toying with the company's music program and cheering on the Seattle Supersonics basketball team he owns. "We have continued to discover new opportunities," says Schultz, who gave up the chief executive title in 2000. Seems a reasonable assumption, but to date it has been wrong. Now, after a two-year crash course in the coffee-shop business, he'll need yet different skills: the kind needed to sustain the growth of a $5.3 billion (sales) company that has defied skeptics and made short-sellers cry.Įver since Starbucks founder Howard Schultz took his chain public in 1992, many people (including this magazine) have argued that there is a limit to the number of customers willing to pay $4 for a fancy cup of coffee. In the stagnant supermarket business where he spent much of his career, Donald, 50, built a reputation as someone who could both start a business from scratch and pull off a turnaround.
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