Starbucks restructuring efforts eat into its profits

By Sofiya Avramova

Starbucks’ plan to shut down poorly performing outlets leads to loss of profits for the fourth-quarter. Estimated costs of restructuring totaled $105m worldwide. The alternative or complementary argument to loss of profits also lies in 8% decline in same-store sales from the previous year. Starbucks cost-cutting plan included closing of 600 outlets in the U.S. and 61 in Australia. The goal was to achieve 1,000 job cuts in an undergoing effort to reduce costs. The original founder attempts to revitalize growth in sales in 2009. Mr. Howard Schultz was quoted the following “with a re-architected cost structure … we began the new fiscal year with a healthier store portfolio that will allow for operating margin expansion” He takes it even further to say: “despite a global economic environment which shows no immediate signs of improvement” This view seems overly optimist. Can Starbucks continue to grow, when prognosis for China’s global decoupling did not materialize?