Starbucks Cuts 600 Jobs
New York Starbucks Corp. said on Thursday it would eliminate 600 jobs as it works to turn around stagnating U.S. coffee shops in the face of a weak economy. Chief executive Howard Schultz, who made the announcement in an e-mail to employees, is slated to share details of the company's strategy at a shareholder meeting on March 19.
Starbucks laid off 220 employees on Thursday. One-third of them worked in Seattle, spokeswoman Valerie O'Neil said. Those employees performed a variety of duties from finance to design and marketing.
The company has also eliminated an additional 380 open positions, O'Neil said. None of the cuts affect people working at Starbucks outlets, she said, adding that Starbucks has 170,000 employees.
Sales at established U.S. Starbucks outlets fell last quarter, and the company has already announced plans to expand overseas and close underperforming U.S. stores.
UBS Equity Research analyst David Palmer called the move a visible step to remove bureaucracy and cost.
"We expect earnings to ramp through the year as unit growth slows, innovation improves (and) dairy pressures abate," Palmer said in a client note.
McAdams Wright Ragen analyst Dan Geiman said the layoffs were expected.
"I don't think it's a surprise at this point," he said.