Starbucks Corp. is cutting 600 posts, with its headquarters in Seattle taking the bulk of the reduction, in an effort to revive the struggling coffee chain.
Seattle-based Starbucks chief executive officer Howard Schultz wrote in an e-mail to employees that
220 staff will be laid off and another 380 open jobs will not be filled, as the company tries to revive its flagging US business.
We have to step up to the challenge of being strategic as well as nimble as our business evolves, Shultz said.
One third of the staff laid off work in Seattle, but the company said no shop staff are affected by the changes. Starbucks employs about 144,000 in the U.S. and more than 90 percent of them are in retail jobs.
Unfortunately, we have not been organized in a manner that allowed us to have a laser focus on the customer, he added.
Sales have been falling as the US economy has slowed, and Starbucks has also been hit by higher milk costs causing its shares to lose almost half their value.
Since returning as CEO, Mr. Schultz has said he plans to close weak stores and slow the number of store openings in the U.S. The chain plans to open 1,175 US outlets in the 2008 financial year, around 425 less than previously planned. Shultz said he will release more details of his plans at the company's annual meeting next month.
The coffee giant recorded profit of $672.6 million on $9.41 billion in revenue for its fiscal year which ended Sept. 30