January 28, 2009

Starbucks cutting up to 6,700 jobs in ’09

Starbucks Coffee Co. of Seattle said Wednesday it will eliminate up to 6,700 jobs this year.

Chief Executive Howard Schultz announced the cuts in a company-wide memo, the Seattle Post-Intelligencer reported.

Plans call for 700 non-store employees to be laid off, about half of them at Starbucks' Seattle headquarters, effective in mid-February. Schultz said the company will close about 300 additional underperforming stores in its 2009 fiscal year, about 200 in the United States and the remainder in international markets.

The company could cut as many as 6,000 in-store jobs this year, the Post-Intelligencer said.

Starbucks laid off more than 1,000 workers in four rounds of jobs cuts in 2008, the newspaper said. Company revenue grew 10 percent in 2008 to $10.4 billion, the report said, but profits fell to $315.5 million, less than half that of 2007.

Starbucks announced first-quarter results Wednesday showing revenues were down 6 percent year-to-year as same-store sales plunged 9 percent.

The forecast by experts suggests the economic situation will get worse before it gets better, Schultz said in the memo.

Noting that Starbucks contributed $15 million in 401(k) savings plan matches in 2008, Schultz said matches would be discretionary in 2009. The company is also changing its paid time-off policy for U.S. retail hourly workers.

Schultz has requested that his annual base salary be reduced to less than $10,000, and said Starbucks will sell one of its two corporate jets, the Post-Intelligencer said.

Starbucks said earlier Wednesday it would stop routine brewing of decaffeinated coffee at noon to save $400 million in the next seven months. The demand for decaf falls off in the afternoon, company officials said.

With our current standard of continually brewing decaf after 12 p.m., we have seen a high amount of waste, the company said in a statement.

Customers can order decaf after noon, but they may have to wait four minutes for the staff to brew a fresh pot, the Houston Business Journal reported Wednesday.