Howard Schultz, CEO of Starbucks, has a lesson for investors in Salesforce.com and Netflix:
After decades of breakneck expansion under Mr. Schultz, tight-fisted consumers abandoned it. The company’s sales and share price sank so low (between December 2006 and December 2008, Starbucks’ stock price dropped 73%) that insiders worried Starbucks might become a takeover target…
“Everything Starbucks did in the past, more or less, had worked,” Mr. Schultz said in an interview in January at the company’s headquarters, with a view of Puget Sound south of downtown Seattle. “Every store we opened was successful, every city, every country.”
He continued: “Growth had a life of its own — and that’s O.K., when you’re hitting the cover off the ball every time, but at some point, nothing lasts forever.”
Starbucks stock price has quadruped since December 2008, but it took a long time and a lot of patience for SBUX investors to break even when compared with the closing price of December 2006, and it is still below its all-time high of $40.01 reached in N0vember 2006.