November 15, 2018 — 350 HQ STAFFERS GONE — ACTIVIST INVESTOR HAS NOSE UNDER THE TENT.
Continuing with the reorganization plan previous announced, the company will be laying off 350 employees, mostly at their Seattle headquarters, and mostly in areas like marketing, creative, product, technology and store development.
According to CEO Kevin Johnson, “Every single decision was made after very careful consideration and reviewed with leaders across the company. And while incredibly difficult, they came as a result of work that has been eliminated, de-prioritized or shifting ways of working within the company.”
Look for more changes driven by activist/investor William Ackman of Pershing Square Capital Management who has taken an interest in the company.
It should come as no surprise that Starbucks has continued to restructure its store in the face of slower business, increasing competition, bad publicity, higher rents, wage minimums, and market saturation.
The latest realignment comes with the announcement that Starbucks is planning to close at least 150 stores and layoff hundreds of employees. Even noting that growth is slowing, the company will be catering to Wall Street by increasing share buy-backs and shareholder dividends.
Starbucks Announces Strategic Priorities and Operational Initiatives to Accelerate Growth and Create Long-Term Shareholder Value
Starbucks is optimizing its U.S. store portfolio at a more rapid pace in FY19, including shifting new company-operated store growth to underpenetrated markets, slowing licensed store growth, and increasing the closure of underperforming company-operated stores in its most densely penetrated markets to approximately 150 in FY19 from a historical average of up to 50 annually. In FY19, this will result in a slightly lower growth rate in net new company-operated stores.
Adds 5 million new digitally registered customers with Digital Flywheel since April 2018; Active Starbucks Rewards members up 13 percent year-over-year to 15 million
Three newer major digital initiatives will contribute approximately 1-2% attributable comps in FY19
Raises target for cash returned to shareholders to $25 billion through FY20, including a 20 percent increase in the company’s regularly scheduled quarterly dividend
Sharpens focus on optimizing store footprint, anticipates lower net new store growth in the U.S. for FY19 - further concentrating growth in underpenetrated markets
Decisive steps being taken by leadership to address an anticipated 1 percent growth in Q3 FY18 global comparable store sales
Announces plans to drive G&A efficiency [cost-cutting]
It can happen to anyone, anytime, anywhere ... are you wondering, Am I Next?