Tight Economy Forces Starbucks To Close 600 Stores
The economy is putting a big squeeze on Starbucks Corp. as consumers -- and even avid fans -- are cutting back on $4 lattes and cappuccinos. As a result, the ubiquitous brand that was popping up on street corners all across America for the past decade with little sign of slowdown, now plans to shutter 600 company-operated stores.
Earlier this year, Starbucks had announced it would close 100 stores. The 600 stores now closing include the original 100 previously announced, the company said.
Although the Seattle-based company did not reveal which stores will be closed, it did say they are under-performing units peppered across the country. Starbucks also admitted that 70 percent of the stores slated to close had been opened after the beginning 2006.
About 12,000 workers, or 7 percent of Starbucks' global work force, will be affected by the closings, which are expected to take place between late July and the middle of 2009.
Starbucks is trying to relocate as many workers as possible to others stores and said it is uncertain at this juncture how many jobs will be lost, but it estimates approximately $8 million in severance expenses, according to a report form the Associated Press.
The company expects special charges of up to $348 million related to the closures, of which $200 million to be booked in the fiscal third quarter ended June 30, CFO Pete Bocian said during a recent conference call.
At the end of March, there were 16,226 Starbucks stores around the world. The company operates 7,257 of those stores in the United States and 1,867 abroad; the balance of stores are licensee operated.