The store closures will result in the elimination of 6,000 jobs, though the company will attempt to find many of the affected associates new positions in the company. However, the move will cut costs and should improve productivity and comparable-store sales at the remaining units, said Troy Alstead, executive vice president and CFO.

"We approached this decision through a process similar to last year," Alstead said. "In the US, the closures are spread across all markets and account for 3% of the portfolio."

International closures comprise 5% of that portfolio.

The company also is cutting back its new company-owned and licensed store openings: Plans now call for Starbucks to open 140 company-owned units in the United States this year, down from a previous goal of 200 new stores. Internationally, the company now plans to open 170 new stores in fiscal 2009, down from the company's previous expectation to open 270 new stores. Starbucks now expects to open approximately 125 net new licensed stores in the US and approximately 360 net new licensed stores internationally.

"We continue to see considerable weakness in some international markets, especially the United Kingdom and Canada," said Howard Schultz, chairman, president and CEO.

In addition, Starbucks is approaching landlords about renegotiating rents at the surviving stores.

"We're attempting to work with the landlords in a win/win way to reflect ongoing conditions," Alstead said. "We do think it's meaningful."

Consolidated net revenues were $2.6 billion for the quarter, down 6%. Comparable store sales declined 9%. Net income was $64.3 million compared to net income of $208.1 million for the same period last year.

Starbucks operates 16,000 units worldwide.

Instant Insights /

Starbucks Closing 300 More Units, Trims Openings

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