Starbucks dumps chief executive and recalls Schultz

by Staff, Brand Republic 08-Jan-08, 09:50

NEW YORK - Starbucks has sacked its chief executive Jim Donald and reinstalled its chairman, and former long-time chief, Howard Schultz, in the top job.

Starbucks is facing continued pressure in the highly competitive coffee market and its shares had fallen by as much as 50% in the last year finishing Donald's tenure as chief executive. The fall in the value of the group's share price has seen its value halve to $13bn.

Schultz, who was previously chief executive officer of Starbucks from 1987 to 2000, will now oversee a plan to revitalise the coffee chain with a new strategy, which may include the closure of some retail outlets.

Full details of the plan will be given to shareholders when it reports its results on January 30. It is thought that new in-store designs and new products could also be introduced.

Schultz said: "The most serious challenge we face is of our own doing. I am not going to use the economy, with you or our people, as an excuse."

Schultz, who bought Starbucks in 1987 and made it the global giant it is today, had previously been critical of the direction that Starbucks had taken in a memo, which was leaked last year.

He said: "We have had to make a series of decisions that, in retrospect, have (led) to the watering down of the Starbucks experience, and, what some might call the commoditisation of our brand."

Donald leaves Starbucks after five years. He joined the firm in 2002 as president of its North American division and was named CEO in 2005. He joined from supermarket group Pathmark where he was also CEO.