More Bad News Brewing At Starbucks

Coffee giant Starbucks says it is closing 200 more U.S. stores and 100 abroad. Nearly 7,000 employees may lose their jobs in a new round of store closures and cost cutting. With quarterly profits down sharply and the economy getting weaker, Starbucks hopes to slash its costs by $500 million this year.

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RENEE MONTAGNE, host:

Starbucks is shutting down more stores. After announcing last summer that it will close hundreds of outlets, the coffee chain now says it's shuttering 300 more and its slashing jobs. From Seattle, NPR's Wendy Kaufman reports.

WENDY KAUFMAN: With quarterly profits down sharply and the economy getting weaker, Starbucks hopes to slash its costs by about $500 million this year. Speaking on a conference call, CEO Howard Schultz said employee benefits are being trimmed, expansion plans are being scaled back, operations are being streamlined, and jobs are being cut.

Mr. HOWARD SCHULTZ (CEO, Starbucks): These decisions were about the need and our management's intent to transform Starbucks into a leaner, more nimble, and more aggressive company that is prepared to act and react quickly to fast-changing market conditions and consumer behavior in the U.S. and around the world.

KAUFMAN: Most of the job cuts, about 6,000 of them, are related to retail store closings and slower expansion efforts. In addition, 700 non-retail jobs will be eliminated. In this climate, the moves are hardly surprising, and Starbucks will still have more than 11,000 outlets in the U.S. Still, marketing consultant John Moore(ph) says it's quite striking to see a company whose business model was based on growth scale back.

Mr. JOHN MOORE (Marketing Consultant): Now they are having to do business in an economy where they are seeing fewer customers coming in each day, each week. On top of that, they will have fewer locations to drive new sales.

KAUFMAN: One other thing is being scaled back. Howard Schultz asked his board of directors to cut his salary. His base pay, excluding stock options, is now $10,000, down from more than a million last year. Wendy Kaufman, NPR News, Seattle.

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