Starbucks to cut 6,700 jobs and shut 300 stores as profits plunge

by Staff, Brand Republic 29-Jan-09, 09:20

NEW YORK - Coffee shop chain Starbucks is cutting 6,700 jobs and shutting 300 underperforming stores after reporting a 69% fall in profits during the first quarter of the year.

About 6,000 of the group's 167,000 retail staff will be made redundant, along with 700 employees who work for the firm, but not in the stores.

Half of the staff at the Starbucks Support Centre in Seattle will be let go by mid-February.

Two-thirds of the store closures will be in the US, with the rest being spread internationally. These come on top of the 661 closures announced in 2008.

Starbucks said the cuts and changes will result in about $500m (£354m) in savings in fiscal 2009.

In a letter to employees, chairman and chief executive Howard Schultz, said: "These decisions have been made to ensure the company is leaner and prepared to endure a worsening economic climate.

"I can assure you the management team is aware of the impact of these steps on the organization -- both those who will depart and those who stay.

"For those of you who will be departing the organization, I thank you for your contributions to Starbucks and wish you and your families the best during this difficult time."

The cuts come on the back of declining profits as the firm struggles to cope with the worsening economic conditions.

The group reported a net profit of $64.3m in the 13 weeks to December 28, which was down from $208.1m a year ago.

Its revenue fell 6% to $2.62bn, down from $2.77bn from the year before, driven mainly by a 9% fall in sales at established coffee shops.

Shultz said: "The decisions we make are about preserving the future of Starbucks. And I can promise you that I and the leadership team will do all that we can to put us in a position to emerge strong on the other side of this crisis, and stay true to our values and culture."

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