Starbucks closing 600 US stores

SEATTLE – Starbucks Corp. said on Tuesday it will close 600 company-operated stores in the next year, up dramatically from its previous plan for 100 closures, a sign the coffee shop operator continues to struggle with the faltering US economy and its own rapid expansion.

Seventy per cent of the stores slated for closure had opened after the start of 2006, the company said in a statement. To put it another way, Starbucks is closing 19 per cent of all US company-operated stores that opened in the last two years, Chief Financial Officer Pete Bocian said during a conference call.About 12 000 workers, or 7 per cent of Starbucks’ global work force, will be affected by the closings, which are expected to take place between late this month and the middle of 2009, spokeswoman Valerie O’Neil said.O’Neil said most employees will be moved to nearby stores, but she did not know exactly how many jobs will be lost.Starbucks estimated US$8 million in severance costs.The company had previously planned to shut 100 stores.The 500 more that will be closed had been on an internal watch list for some time.They were not profitable, not expected to be profitable in the foreseeable future, and the “vast majority” had been opened near an existing company-operated Starbucks, Bocian said.Some analysts had wondered whether Starbucks’ explosive growth in the US would come back to haunt it as the market became saturated.But before Tuesday, the company avoided acknowledging that saturation was an issue, and pinned weak financial results and adjustments to new store openings on the economy.At the end of March, there were 16 226 Starbucks stores around the world.The company operates 7 257 of those stores in the US and 1 867 abroad; the remaining 7 102 locations are run by partners who license the Starbucks brand.Nampa-APTo put it another way, Starbucks is closing 19 per cent of all US company-operated stores that opened in the last two years, Chief Financial Officer Pete Bocian said during a conference call.About 12 000 workers, or 7 per cent of Starbucks’ global work force, will be affected by the closings, which are expected to take place between late this month and the middle of 2009, spokeswoman Valerie O’Neil said.O’Neil said most employees will be moved to nearby stores, but she did not know exactly how many jobs will be lost.Starbucks estimated US$8 million in severance costs.The company had previously planned to shut 100 stores.The 500 more that will be closed had been on an internal watch list for some time.They were not profitable, not expected to be profitable in the foreseeable future, and the “vast majority” had been opened near an existing company-operated Starbucks, Bocian said.Some analysts had wondered whether Starbucks’ explosive growth in the US would come back to haunt it as the market became saturated.But before Tuesday, the company avoided acknowledging that saturation was an issue, and pinned weak financial results and adjustments to new store openings on the economy.At the end of March, there were 16 226 Starbucks stores around the world.The company operates 7 257 of those stores in the US and 1 867 abroad; the remaining 7 102 locations are run by partners who license the Starbucks brand.Nampa-AP