Industry News | July 30, 2008

Schultz Announces More Store Closings

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Starbucks CEO, Howard Schultz, continued his letter-writing campaign with an open memo to Starbucks employees yesterday in an attempt to turn the suffering company around. Shultz announced the elimination of 1,000 jobs as well as the closure of 61 Australia stores and the restructuring of several executive positions.

According to Schultz, the changes were made based on the company’s new-found “razor-sharp, unrelenting focus” on the brand.

“Although I, along with my team, made the hard choices to close stores and reduce the number of positions, which will result in loss of jobs, ultimately, I feel that they rest with me,” he wrote.

In an attempt to stream-line his corporate team, Schultz also reorganized five executive positions. The largest move is the elimination of the role chief operating officer. Martin Coles, who formerly held the position, is now president of Starbucks Coffee International.

Michells Gass, former VP of Global Strategy, became the VP of marketing and category, which includes food and beverage. Peter Gibbons has been promoted from SVP of global manufacturing operations to executive VP of global supply chain operations. And Vivek Varma, former general manager of communications and public relations for Microsoft platform services division, has been named SVP for Starbucks public affairs and will assume that role on September 8.

As for the closing of almost three-fourths of the company’s Australia stores, Schultz vows that the move reflects business challenges specific to Australia and that there is no plan to close any other international stores. The 61 underperforming stores will close by August 3 in an attempt to focus on Brisbane, Melbourne, and Sydney.

“We are well into the implementation phase of transforming Starbucks and we believe that this difficult, yet necessary, decision to close stores in Australia will help support the continued growth of our international business,” Schultz said in a separate statement released yesterday.

This announcement follows Schultz decision to close 600 U.S. stores earlier this month, a decision he called in his letter “one of the most angst-ridden choices” he’s had to make during his 25 years with the company.

As for the company’s remaining leaders, Schultz will resurrect in October Starbucks’ Leadership Conference, which has not been held in two years. Schultz expects more than 10,000 insiders to attend the event where fall, holiday, and 2009 promotion plans will be unveiled.

—Blair Chancey

News and information presented in this release has not been corroborated by QSR, Food News Media, or Journalistic, Inc.