July 30, 2008 / 7:07 AM / 11 years ago

Starbucks to cut 1,000 jobs, COO post

CHICAGO (Reuters) - Starbucks Corp (SBUX.O) said on Tuesday it is cutting 1,000 support jobs and eliminating the post of chief operating officer in a move to give founder and CEO Howard Schultz “a direct line of sight” into the company’s business.

The shake-up also includes the departure of the one-time head of Starbucks ailing U.S. business.

Starbucks shares rose more than 5 percent on Nasdaq amid a broad rally in U.S. restaurant stocks.

The management changes are the latest in a series of moves at the coffee chain operator, which has seen profits hit and traffic at U.S. stores lag as cash-strapped consumers cut back on everyday luxuries like coffee drinks that sell for $3 to $5.

“There has been quite a shake-up over the last year and it looks like that is just continuing,” Morningstar restaurant analyst John Owens said. “For Starbucks to turn around its business, they probably do need to replace some of the people that made the decisions that kind of led them down the path to where they are today.” Owens did not comment on specific managers.


The company said Martin Coles will move from the role of chief operating officer back to his prior position as president of Starbucks Coffee International.

He will replace Jim Alling, who is leaving the company, Schultz said in an email to Starbucks employees that was released by the company.

Alling had been in charge of the company’s U.S. business under former Chief Executive Jim Donald and moved to the international job when Coles was named chief operating officer last year.

Donald was replaced as CEO by Schultz, the founder and chairman of Starbucks, in January.

Schultz said he made the decision to eliminate the chief operating officer job so that he could have “a direct line of sight” into the company’s businesses.

In recent weeks, Starbucks has announced the closing of 600 U.S. stores and on Tuesday it said it would close 61 of the 84 stores located in Australia.

The 1,000 job cuts announced Tuesday represent 15 percent of the company’s non-store positions, a spokeswoman said, adding that about 450 of the jobs were already vacant.

Starbucks shares were up 76 cents at $14.99 on the New York Stock Exchange.

Editing by Dave Zimmerman

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