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Starbucks Chairman Replaces CEO, Plans To Close Some U.S. Stores

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The Associated Press

Published: January 8, 2008

SEATTLE - Starbucks Corp. said Monday that it is returning its chairman, Howard Schultz, to the chief executive's job to lead a major restructuring initiative, replacing CEO Jim Donald.

The move, coupled with plans to open new U.S. stores at a slower pace, comes as the world's largest chain of coffeehouses has seen its stock plummet 50 percent last year amid declining traffic in its domestic stores.

Starbucks' announcement after regular markets closed sent the Seattle-based company's shares up $1.67, or 9 percent, in after-hours trading. The shares had gained 27 cents to $18.38 in the regular session.

Starbucks said the leadership shuffle is part of a series of other initiatives that include closing U.S. stores that aren't performing well, introducing new products and store designs, and improving training for baristas.

The company said it plans to take some of the capital originally intended for U.S. store growth and use it to accelerate its international expansion.

Schultz said he is returning to the CEO role "for the long term" and that his agenda will also include streamlining the company's management.

Schultz previously served as chief executive officer from 1987 to 2000.

Donald had been CEO since March 2005, when he was promoted from president of the company's North American division to replace Orin Smith, who retired.

Starbucks has struggled in recent months as consumers cut spending amid declining home values and higher fuel prices. Meanwhile, competitors such as Dunkin' Donuts and McDonald's Corp. have cut into Starbucks' customer base by launching their own gourmet coffee lines.

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