SEATTLE – Some Rhode Island coffee shops are expected to close this year as Starbucks Corp. (NYSE: SBUX) shutters about 300 “underperforming” locations worldwide, including 200 in the United States, the company told Providence Business News this morning.
The chain has more than 11,000 shops in the United States alone. Its Web site lists five retail locations in Providence and another 18 Starbucks shops across Rhode Island.
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The list of to-be-closed locations hasn’t been finalized, Starbucks said in an e-mailed statement. “Stores will be notified once a full assessment has been completed, which is expected to occur by fiscal-year end,” the company said. “Though we do know our Rhode Island market will be impacted, we do not at this time have specific details about numbers of partners or stores that will be impacted by these announcements.”
Starbucks CEO Howard Shultz said, in an open letter dated yesterday, that the company’s retail-partner work force of 167,000 will be pared by about 6,000 retail employees over the next eight months. Affected workers will receive severance packages based on their job levels and years of service, he said.
The company described the cuts as a response to its worse-than-expected earnings in the three months ended Dec. 28: In a report released yesterday, Starbucks said its fiscal first-quarter profit fell 69 percent year over year as net revenue fell $2.6 billion, or 6 percent, compared with a year ago. Same-store sales fell 9 percent companywide and 10 percent in the United States.
The new closings are in addition to the 600 U.S. store closings and 61 Australian closings the company announced last summer. The company still plans to open about 140 new U.S. stores in fiscal 2009, and another 170 abroad, down from its previous targets of 200 here and 270 in other nations.
In his letter, Shultz made clear that the turmoil in the global economic markets has had an effect on the coffee-shop chain.
“In the last few weeks, we have seen countless companies announce layoffs and some bankruptcies,” he wrote. “I point this out to try to 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.”
