29th Jan 2009 - 00:00
Abstract
Starbucks has said that profits during the first quarter of the financial year have dropped by a worrying 69% and as a result the coffee firm will cut over 6,700 jobs in 2009.
The global coffee chain reported net income of $64.3 million down from $208.1 million recorded for the same period last year. Despite profits sliding, management at Starbucks have described the company as being "well-positioned to weather the challenging global economy" and called the balance sheet "strong" and "solid". Approximately 300 underperforming stores will be closed in 2009, with two-thirds of the closures executed in the US. This is in addition to the 600 US store closures announced in July 2008. As a result 6,700 jobs will go. Chairman, Howard Schultz explained the moves in an open letter to Starbucks' employees: "As you well know, these are very challenging times for everyone at Starbucks. We are working hard to navigate both a deteriorating global economy and the restructuring of our business. "The forecast by experts suggests the economic situation will get worse before it gets better. Moving forward we will be unable to maintain our workforce as it is currently organised. These decisions have been made to ensure the company is leaner and prepared to endure a worsening economic climate. "In the last few weeks we have seen countless companies announce layoffs and some bankruptcies. I point this out to try and put in context that the financial crisis is affecting almost every company around the world. The decisions we make are about preserving the future of Starbucks."