Skip navigation

Starbucks to close 600 stores

SEATTLE Starbucks Corp. on Tuesday announced that it planned to close 600 domestic company stores, which is 500 more than the coffeehouse giant had previously targeted for closure. Officials also said the company would cut back further on new openings planned for fiscal 2009.

Starbucks said it would close most of the units during this year or the first half of fiscal 2009. Officials said they selected locations that were not seen as profitable at the store level, but they also considered the impact of current and anticipated economic trends. The closures will be spread across the United States, and about 70 percent of them have been opened since the beginning of fiscal 2006.

Starbucks currently has about 7,000 stores in the United States.

An estimated 12,000 full- and part-time positions will be eliminated, or about 7 percent of the company’s global workforce. Officials said they would attempt to place employees at nearby Starbucks locations.

“Throughout the history of the company, we have always aspired to put our people first. This makes our decision to close stores difficult, because it is disrupting the lives of the people who have worked so hard to deliver superior service to our customers,” said Howard Schultz, chairman, president and chief executive of Starbucks.

“At the same time, we recognize that it is necessary to make decisions that will strengthen the U.S. store portfolio and enable us to enter into fiscal 2009 focused on enhancing operating efficiency, improving customer satisfaction and ensuring long-term value for our partners, customers and shareholders.”

The aggregate charges associated with the closures is expected to be in the range of $328 million to $348 million, including severance costs of about $8 million, officials said. When the actions are completed, cash charges are expected to result in a net cash outflow of about $100 million, net of related income tax benefits.

At the end of the second quarter ending March 30, Starbucks officials announced plans to slow domestic growth over the next three years, with fewer than 400 net new stores expected to open each year. On Tuesday, however, officials said anticipated openings for the fiscal year starting in October would be reduced further to 200.

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish