Starbucks cuts jobs, shuts stores

Seattle, January 29: The coffee is getting bitter for Starbucks Corporation. The largest coffeehouse company in the world has announced that it will lay off 6,700 workers and shut 300 stores in the wake of diminishing profits.

The proclamation to do away with 6,000 cafe positions and 700 corporate jobs comes just a few days after the coffee maker announced that it will show the door to 1000 employees. In the earlier communication Starbucks had stated that the jobs of employees who serve customers, known as baristas, were not in jeopardy.

Based in Seattle, Washington, Starbucks is an international coffee house chain operating in 94 countries with 16,120 stores.

Initially opened in Pike Place Market in Seattle in 1971, Starbucks has come a long way. Today its sells not only drip brewed coffee, espresso-based hot drinks, snacks, coffee beans but also books, music, and film under the ‘Hear Music’ brand.

The besieged coffee chain is struggling to breathe life into its United States business. It has been hit hard by swelling job losses, home foreclosures, and stock market crashes that have led customers to shrink their spending budgets.

The retailer has, over the past year, refashioned its menu and has indulged in cost cutting measures to revive its business. The Seattle coffee company has already cut more than 2,000 jobs and is closing 600 stores.

Chief Executive Officer Howard Schultz is hell bent on trimming costs. The latest round of job cuts and store closures further Schultz’s plans. Five of its top executives were not given bonuses in 2008 as the coffee retailer’s performance was not up to the mark.

The CEO himself will have to make do without any base salary rise in 2009.

Starbuck’s net income plunged 69 percent to $64.3 million down from $208.1 million last year. Sales fell 5.5 percent to $2.6 billion for the quarter ended December.

Schultz minced no words in admitting the dismal performance of the company when he said, "I’m far from pleased with our performance this quarter and I anticipate that our results could remain under pressure until the economy begins to recover.”