Starbucks to axe 600 US stores as part of turnaround plan

LONDON - Coffee chain giant Starbucks will close 600 underperforming stores in the US by the middle of 2009 in an effort to improve its long-term profitable growth.

The company has announced the decision as part of a plan to transform the company. The stores that are being closed are spread across the US, with 70% of them having opened since the beginning of the 2006 financial year.

Starbucks first announced its transformation project in January, which included building the company for the long term, improving the relationship with their customers and improving the current state of the US business.

The criteria used to decide which stores would close included locations that were not profitable and stores which were not projected to see acceptable returns in the foreseeable future.

Howard Schultz, chairman, president and CEO, said: "Our executive and field leadership teams conducted an extensive review of our US company-operated store portfolio with a goal of enabling our organisation to focus its efforts on locations where we can more effectively improve the customer experience."

This closure plan in the US will have no direct impact on the brand in the UK, where store opening are continuing.

However in May, Starbucks said there were signs of a slowdown in the UK as it battled competitors such as Costa and Caffe Nero and food outlets such as McDonald's and Pret a Manger.

In Hammersmith, Starbucks is opening a fourth store opposite a Pret a Manger and next to a McDonald's, less than 150m from another of its stores.

A spokesperson for Starbucks UK said: "We are looking forward to international growth with stores opening in new markets such as Argentina, and in already existing markets. However the US closure of stores is not directly linked to expansion in the UK or any other markets outside of the US."

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