Starbucks announces major management reshuffle, to cut 1,000 jobs

30 July 2008

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.