Tuesday, July 1, 2008

Starbucks Adjusts to Economy

Starbucks is closing 600 US stores that have not been profitable and will open fewer than originally planned in its coming fiscal year. This represents an adjustment to the slowing economy and a reassessment of its fast-growth policy of the past 2 years. Starbucks employees are uneasy about their futures and some feel that the return of Howard Schultz has not improved communications between the executive and management levels.

Allison Linn for MSNBC reports:

In a filing with the Securities and Exchange Commission, the company said the job cuts represent about 7 percent of Starbucks' global workforce. Still, Starbucks said it expects many workers to find jobs in nearby stores.

The Seattle-based gourmet coffee retailer said in a conference call with analysts that the stores it decided to close were not profitable and that many had opened in the last few years. In addition, Chief Financial Officer Pete Bocian said the vast majority were located close to another Starbucks store.

The closures will account for 8 percent of all company-operated U.S. stores, and will leave the company with about 6,600 U.S. outlets, Bocian said. He said the stores closings will begin in late July and are expected to happen over a period of months.

There are currently more than 16,000 Starbucks stores worldwide.

Starbucks, known for sometimes going so far as to open stores across the street from one another, has recently acknowledged that it may have lost some of its luster during a long period of rapid store openings and expansion into everything from breakfast sandwiches to movie promotions.

Read it all here.

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