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Howard Schultz Sent This Memo to Starbucks' Store Managers Last Night

Stocks in this article: SBUX

Message from Howard: Thank You and Two Trends to Keep in Mind

January 6, 2014

Dear Store Managers and Senior Leaders:  

I want to take a moment to extend Happy New Year wishes to you and your families, and my personal thanks to the store teams for the hard work in bringing our Starbucks holiday season to life. Red cups, Christmas Blend, and moments of connection filled our stores with energy and warmth ...creating another memorable holiday experience in our stores around the world. 

As we move into the New Year, I want to congratulate all of you on delivering fantastic results during calendar 2013, a year in which we created significant value for our shareholders - and our partners as owners of Beanstock - with a 46% increase in our share price. 

As leaders in the company, there are important insights we must keep in mind as we enter 2014, based on the implications of two emerging trends this holiday that we anticipated - and retailers around the world observed - because I am certain these trends are here to stay.

First, 2013 was the first holiday that many traditional retailers saw in-store foot traffic give way to online shopping in a very big way. Customers watched, waited, compared prices and then bought the brands and products they wanted online - frequently using a mobile device to do so. As a result, national data will show that increases in online shopping this holiday far outpaced increases in traditional in-store shopping. Starbucks was not immune but we will benefit from this shift through our strategic investment in creating world-class digital and mobile payment expertise and assets ideally positioned us to benefit from this transition, enabling us to efficiently handle over $1.3 billion in total Starbucks Card loads across the U.S. and Canada for the quarter, up significantly over both last year and our current year plan.

Second, this was also the holiday that customers embraced the convenience and choice afforded by physical and digital gift cards. Instead of gifting a particular item many consumers chose to gift "choice."  And with our respected and trusted brand and special holiday Starbucks Cards and Starbucks Card eGifts available in our stores, online and in thousands of other retail locations, we were ideally positioned to benefit from this shift as well. To put this in perspective, in the U.S. and Canada on Thursday, Dec 19th we set a single day record with approximately 2.4 million new Starbucks Card activations .. and then on Monday, Dec 23rd, and Tuesday, December 24th we broke the single day record .. again on successive days! Overall, we generated over $610 million in new card activations in the holiday quarter, representing a significant increase over both last year and plan.

These results are nothing less than extraordinary. I want to recognize Adam Brotman, chief digital officer and Curt Garner, chief information officer, their teams and all of you and field leadership for preparing us to seamlessly handle the much greater than expected volume increases we experienced as a result of the convergence of these two trends.

Going forward our in-store Partners can expect an influx of customers as cards received as gifts and reloaded over holiday are redeemed over the coming weeks and months. Please ensure your teams are ready! Many of these customers will be new customers for Starbucks and their visit will provide us with a unique opportunity to exceed expectations, deliver a great Starbucks Experience and make a lasting impression. It also presents an opportunity to remind these new customers of the value, convenience and significant advantages of joining the My Starbucks Rewards (MSR) loyalty program and of using our iPhone and Android mobile apps.

Your hard work and effort during the holiday season positions us to leverage record breaking Card performance. Along with the other exciting initiatives we have underway we are off to another strong fiscal year. I know you all will stay focused and keep your teams inspired and motivated. 

Thank you, as always, for your passion and dedication and for consistently delivering the Starbucks Experience in over 20,000 stores to over 70 million customers in 63 countries each week.

I'm very proud to be your partner,


--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist for TheStreet. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.
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