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Starbucks to Close 61 of Its 84 Stores in Australia

July 29, 2008

By THE ASSOCIATED PRESS

SYDNEY, Australia – Starbucks will close more than two-thirds of its 84 stores in Australia by the end of the week under a cost- cutting plan announced today that will put almost 700 people out of work.

The surprise announcement came a few weeks after the global coffee shop franchise that has become ubiquitous around the world announced it was closing 600 company-owned stores in the United States to try to bolster its business.

The closure of the “underperforming” stores in Australia was the result of conditions specific to Australia that were not reflected elsewhere in the world, Starbucks’ chief executive Howard Schultz said in a statement.

“While this decision represents business challenges unique to the Australian market, it in no way reflects the strong state of Starbucks business in countries outside of the United States,” he said. “There are no other international markets that need to be addressed in this manner.”

However, he said the closures were part of Starbucks’ strategy developed early this year to transform the company.

“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,” he said.

Starbucks Coffee International, a wholly owned subsidiary of Seattle, Washington-based Starbucks Coffee Co., will concentrate its business in Australia’s three largest cities.

There are 84 stores operating in six of Australia’s eight states and territories, but 61 will close by Aug. 3, Starbucks said. Twenty- three stores will remain open in Sydney, Melbourne and Brisbane.

The company said 685 jobs would be lost because of the closures, Australian media reported.

Starbucks Co. is due to report its third-quarter earnings in the United States this week. The company has spent recent months attempting to reinvigorate its U.S. business by introducing new products and scaling back its plans for growth.

While the company’s plans to close stores in the United Sates led to criticism that the company had grown too quickly, the scene internationally has looked better. The company says it plans to open 975 new international locations this year.

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(c) 2008 Charleston Daily Mail. Provided by ProQuest Information and Learning. All rights Reserved.




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