Starbucks said yesterday that it was cutting 1,000 support jobs and eliminating the position of chief operating officer in a move to give its founder and CEO, Howard D Schultz, ''a direct line of sight'' into the company's business. The shake-up also includes the departure of the onetime head of Starbucks's ailing American business.
The beverage behemoth will release its fiscal third-quarter earnings after the closing bell today. And analysts don't expect a strong quarter - consensus forecasts call for earnings of 18 cents a share, down about 14 per cent from the same period last year. Shares have fallen nearly 25 per cent so far this year and are about 50 per cent off their 52-week high.
The company said that Martin Coles, now chief operating officer, would return to his previous position as president of Starbucks Coffee International. He will replace James C Alling, who is leaving the company, Schultz said in an e-mail message to Starbucks employees that was released by the company.
Alling had been in charge of the company's home business under the former chief executive, James L Donald, and moved to the international job when Coles was named COO last year. Founder Schultz had returned as CEO replacing Donald in January.
Another shift moves senior vice president Michelle Gass from the post she took six months ago in the office of the CEO. She will lead marketing, food and beverage and be replaced in the office of the CEO by executive vice president Dorothy Kim. Peter Gibbons was promoted to Kim's former position as executive vice president of global supply-chain operations.
It was the latest turnaround move for the struggling Seattle coffee giant, which is sharply slowing its growth and trying to revive sluggish US sales and profits.
Since chairman Howard Schultz stepped back into the job of CEO, he has juggled top management a couple of times, including big shifts Tuesday. He's also begun closing unprofitable stores in the US and announced a host of new initiatives, from an Italian-inspired smoothie to a drip coffee called Pike Place Roast.
Analysts said the store closures announced Tuesday should be the last, (See: Starbucks reverses expansion; to close 600 company-operated stores in the US)
The 1,000 job cuts announced Tuesday represent 15 per cent of the company's non-store positions, a spokeswoman said, adding that about 450 of the jobs were already vacant. These layoffs come after 600 positions were slashed in February and 100 people were laid off in June.
The latest cuts span the company from human resources to finance, information technology, marketing, supply chain, global store development and non-store positions in retail operations.
Starbucks now has about 3,500 employees at its corporate headquarters. It had 172,000 employees worldwide at the end of September, about 12,000 of who will be affected by the closure of 616 US stores during the next few months.
About 685 people are losing their jobs in Australia, where Starbucks said Tuesday it would close 61 of its 84 stores. They are the only international closures Starbucks has announced. Most of its financial woes, including declining traffic, appear to be in the US.
"There are no other international markets that need to be addressed in this manner," Schultz said in a memo to employees that was part of the news release.