Starbucks brings back ex-boss to rescue chain

Troubled Starbucks has sacked its chief executive, handing the reins back to chairman Howard Schultz in a major restructuring initiative to pull the company out of a downward slide.

The move, coupled with plans to close some US stores and slow down opening new ones, comes as the world’s largest chain of coffee houses has seen its stock plummet 50% over the last year amid declining traffic in its domestic stores.

Starbucks would not say how many stores would close and will not detail its revised growth plans until it reports fiscal first-quarter earnings on January 30.

The company’s announcement yesterday after regular markets closed sent its shares up 9% in after-hours trading.

Starbucks said the leadership shuffle was part of a series of other initiatives that include closing underperforming US shops, introducing new products and store designs, and improving training for staff.

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

Mr Schultz, 54, who was chief executive from 1987 to 2000, said he planned to remain the company’s top executive “for the long term” and that his agenda would also include streamlining the company’s management.

His sacked predecessor, Jim 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 have cut back on spending amid declining home values and higher fuel prices. Meanwhile, competitors like Dunkin’ Donuts and McDonald’s have cut into Starbucks’ customer base by launching their own lines of gourmet coffee.