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Elise Amendola/AP

Starbucks To Shutter 600 Stores

July 02, 2008 01:28 PM
by findingDulcinea Staff

The Seattle-based coffee chain may become slightly less ubiquitous as it plans to close hundreds of company-operated stores in the United States.

30-Second Summary

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Starbucks stock rose 72 cents per share, or 4.6 percent, in extended trading after the announcement to shutter 600 stores in the next year. The company will still continue to open new stores, but not as many as once planned.

The company blamed the weak economy for the closings, but in the past analysts have often wondered whether the company's rapid U.S. expansion would become a problem as the market became saturated.

Company spokeswoman Valerie O'Neil said about 12,000 workers, or 7 percent of the global Starbucks workforce, would be affected by the measures, although it is not known how many jobs will be cut as opposed to moved to other stores. 

Seventy percent of the stores slated to be closed opened after the beginning of 2006. Starbucks had been planning to open 400 new stores in fiscal year 2009, but on Tuesday cut that number to 200. There were 16,266 Starbucks stores around the world as of March.

Changes have been brewing for a while at the troubled coffee giant, whose shares have been falling steadily for the past two years.

In April, the brand brought back its original 1971 mermaid logo for eight weeks in an effort to revive warm feelings associated with the brand before it became beleaguered by bad press. Also this year, company founder Howard Schultz returned as chief executive.

Headline Link: ‘Starbucks To Close 600 U.S. Stores'

Background: Starbucks introduces new, customer-friendly features

Key Player: Howard Schultz

Opinion & Analysis: Is Starbucks a wise investment?

Reference: My Starbucks Idea

Related Topic: ‘Mom 'n' Pop Coffee Stores Take On Starbucks’

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