Starbucks to Cut 5% of its Corporate Workforce

Starbucks to Cut 5% of its Corporate Workforce

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Starbucks announced this week that it will cut 5 percent of its corporate workforce. CNBC reports about 350 employees in marketing, creative, product, technology and store development will be impacted, Starbucks CEO Kevin Johnson said in a memo. Starbucks has been plagued with lagging U.S. sales for several quarters. The coffee giant has scaled back on store growth and closed underperforming company-owned locations. On a positive note, Starbucks said its loyalty program grew 15 percent year-over-year, hitting 15.3 million members. The company said Starbucks Rewards members drove nearly 40 percent of sales in the U.S., and will likely be a focal point as the company looks to turn around lagging domestic sales.

Total Retail's Take: There are signs that Starbucks recent struggles might be a momentary blip on the radar for the coffee giant. In its fiscal fourth quarter, Starbucks reported sales in the U.S. and Americas that had been open for at least a year grew 4 percent, the company's strongest same-store sales growth in the U.S. in five quarters. In addition to pumping up domestic sales, Starbucks increasingly looking internationally for growth. For example, earlier this year Starbucks announced a partnership with Alibaba for a delivery service and virtual store in China. The digital-savvy Chinese market represents a growth opportunity for Starbucks, particularly its highly rated mobile application.

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