Starbucks to Pay Some Workers in Stock

http://bit.ly/hGUKJ8

Posted on December 25, 2010

Starbucks (NASDAQ: SBUX)
has been piping hot in 2010. Starbucks' stock has bounced back after a
rough few years during the financial crisis and subsequent recession.
Thanks to an innovative new line of via instant coffee, a push into
retail grocery sales and a number of successful promotions (including
Starbucks’ free holiday drink offer), the coffee giant is definitely on
the upswing.

And it appears Starbucks is willing to share that success with
workers in the new year via company stock. Not a bad Christmas present,
considering SBUX shares are up 43% in 2010 – about three times the
broader stock market!

According to a report over the weekend
in the British newspaper The Guardian, staff in the U.K. could be
compensated with stock if they opt in. The Seattle-based firm’s 6,700
staffers on the other side of the Atlantic are eligible. The Starbucks
employee stock program will replace a previous scheme that was more
complicated and dealt in options – something many workers didn’t have
the investing IQ or confidence to participate in.

There are rumors that U.S. employees could follow if the plan is
successful. That would be a nice way to boost morale, considering that
Starbucks returned to power thanks in part to cost cutting, the layoff
of 12,000 workers and various store closures. Starbucks sales have been
steadily on the rise across 2010, with revenue predicted to be up about
5% this fiscal year over 2009, and then an additional 7% sales growth in
fiscal 2011.

Of course, there’s no guarantee the stock deal will roll out to the
much larger pool of U.S. workers and stores. while Britain is indeed the
no. 2 market for Starbucks worldwide, there are over 11,000 SBUX
locations in the U.S. compared with a mere 800 in the U.K. What’s more
commodity price increases are wearing away the gains made by previous
cost cutting. Sugar and coffee prices have both hit record levels in the
past several months.

Whatever happens, the lucky U.K. Starbucks employees who are rewarded
“restricted stock” will likely be thrilled for the opportunity to share
in Starbucks’ success. and considering the ubiquitous chain is at or
near a critical mass in the U.S., it may be in the best interest of the
company to look toward building leadership and morale overseas. That’s
where the biggest part of Starbucks growth will come from in the years
ahead.

Jeff Reeves is editor of InvestorPlace.com. As of this writing, he
did not own a position in any of the stocks named here. Follow Jeff on
Twitter at http://twitter.com/JeffReevesIP.