Starbucks coffee chain to close 600 stores in USJuly 2nd, 2008 - 10:15 pm ICT by IANS
New York, July 2 (IANS) Starbucks, the largest coffee shop chain in the world, is closing 600 stores in the US beginning this year and has announced laying off more than 12,000 employees, about seven percent of its total work force. Starbuck’s plan to trim down, announced Tuesday in a harsh business climate, is aimed at recapturing its once-mighty growth.
Starting in the late 1980s, the Seattle-based company was till not too long ago known for opening new stores at a breakneck speed, toting up nearly 7,000 company operated outlets in the US alone as of last September.
Now the company says about 70 percent of the stores to be closed have been open for fewer than three years. It did not disclose which stores will be shut, only saying they are spread across all major US markets.
Starbucks chief financial officer Peter J. Bocian said Tuesday: “We believe we’ve improved the profit potential of the US store portfolio.”
Starbucks is one of many retailers hit by consumers becoming tight-fisted in the face of economic troubles ranging from imploding housing markets to rising gas prices.
After the Starbucks announcement, company shares rose as high as $16.53 in after-hours trading Tuesday after closing at $15.62. Overall, they have fallen about 24 percent this year.
With stock price falling, Starbucks’s former chairman and chief executive Howard Schultz took over the company’s reins all over again in January. The company’s second-quarter profit fell 28 percent to $108.7 million, in what was its weakest quarter as a public company.
In addition to closing 600 stores, Starbucks said it would open fewer than 200 new stores in the US next fiscal, down from the 250 initially planned.
Starbucks, however, said it would continue to focus on expanding internationally.
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