China's Downward Price Pressures Stayed Elevated in June
The country's producer-price index fell 3.6% from a year earlier, widening from May's 3.3% decline and staying in negative territory for more than two years, data released by the National Bureau of Statistics showed Wednesday. A poll of economists by The Wall Street Journal had predicted a 3.3% drop.
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Investors eagerly bought shares early in the company's growth phase to profit from the opportunity for its customer-first approach to dislodge market share from rivals like Tim Hortons and Dunkin'. Longtime shareholders have been handsomely rewarded, given that Starbucks shares have surged since its IPO in 1992. A $10,000 investment then would be worth over $3 million many investors' love affair with Starbucks has faded since the company has mostly saturated major U.S. markets like New York and California, reducing chances for sales growth. Its share price is up just 15% over the past five years, while the S&P 500 has climbed 89%. In 2025, Starbucks' stock price has fallen nearly 5%. With Starbucks stores seemingly everywhere, longtime hedge fund manager Doug Kass suggests the company's strategy nowadays is less about reimagining coffee houses and more about milking as much money out of existing locations as possible. Such an approach can boost earnings in the short term, but it poses a significant long-term risk to Starbucks' brand. '[Starbucks] morphed into overpriced purveyors of food/coffee — while the quality of their product offering has deteriorated and the selling cost of the product has risen,' wrote Doug Kass in a post to investors on TheStreet Pro. It's not just the coffee, either. While many may think Starbucks bakes its treats on site, many are previously frozen. 'I couldn't create a danish as unappealing,' said Kass, who has managed money professionally for about 50 years. Starbucks' worker relationship has soured over time Some Starbucks employees agree that the company's mission has lost its way. It was once highly recognized as a pioneer in employee pay, offering solid wages and a 'partner' approach to its workers. 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Starbucks turnaround plan faces uphill battle The company's frayed relationship with some employees isn't the only problem CEO Brian Niccol is trying to fix. Niccol joined Starbucks as CEO in 2024 after over six years at the helm of Chipotle. Shortly after Niccol took over as Starbucks' CEO, he acknowledged 'a shared sense that we have drifted from our core' and announced his 'Back To Starbucks" plan to get the company back on track, focusing on a 'welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas.' However, those comments and Niccol's plans sound hollow to Kass. 'When he got to Starbucks, Niccol started off by using fancy jargon to distract from the fact that Starbucks is losing to both value and premium brands/operators,' wrote Kass. 'Starbucks now faces a very expensive overhaul in its physical locations and product offerings.' 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'It is the Regal Cinemas concession stand without the movies. The notion that the baristas want to hang with the customers has been lost,' said Kass. 'I suspect the turnaround in both companies will take a lot longer than the consensus expects.' To be sure, Starbucks' challenges aren't unique. Indeed, most companies experiencing the kind of success it has experienced deal with similar issues. Still, the hyper-competitive coffee market and the challenges facing Niccol leave Kass thinking that there are better alternatives for investors. 'I would not bottom fish despite the material share-price weakness,' concluded problems may be too big to fix first appeared on TheStreet on Aug 3, 2025 This story was originally reported by TheStreet on Aug 3, 2025, where it first appeared. Sign in to access your portfolio
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