Starbucks plans to close 600 storesJuly 2nd, 2008 - 3:30 pm ICT by Amrit Rashmisrisethi
Starbucks, now plans to close a total of 600 under performing stores as opposed to its previous estimate of 100, said most of the stores would be closed by the end of March 2009.
It didn’t say which store will close. It did not say which stores would close, or whether any Australian outlets were on the hit list. America’s largest coffee chain said 70 per cent of the stores targeted for closure have been open since the beginning of fiscal 2006. The job losses would represent about 7 per cent of the company’s global work force.
Seventy percent of the stores slated for closure had opened after the start of 2006, the company said in a statement. Starbucks is closing 19 percent of all U.S. company-operated stores that opened in the last two years, Chief Financial Officer Pete Bocian said during a conference call.
The company forecast up to $348 million in charges related to the closures, $200 million to be booked in the fiscal third quarter ended June 30. Starbucks reports third-quarter results at the end of July.
Opening with one store in Seattle in 1971, Starbucks didn’t explode until the late 1990s, when it quickly became a cultural phenomenon and expanded around the globe. It currently has more than 15,000 stores worldwide, including 11,000 in the U.S.
Starbucks still plans to open new stores in fiscal 2009, cut the number in half to fewer than 200. The company plans to open fewer than 400 stores in 2010 and 2011.
“We believe we still have opportunities to open new locations with strong returns on capital,” Bocian said.