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Originally published Friday, February 22, 2008 at 12:00 AM

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Starbucks cutting 600 jobs, many in Seattle

Howard Schultz tells employees layoffs are a necessary step to ensuring success of the company.

Seattle Times business reporter

Starbucks said Thursday it is cutting about 600 positions, some through attrition and about 220 through layoffs. No in-store employees were laid off, and the cuts are separate from Starbucks' plan to close about 100 underperforming U.S. stores this year.

Many of the lost jobs, including about a third of the layoffs, are at Starbucks' Seattle headquarters.

The moves are part of Howard Schultz's effort to turn around the company, whose U.S. operations and stock price have suffered the past year. Starbucks' board ousted former Chief Executive Jim Donald last month and reinstated Schultz as the company's top boss.

Since then, he has decided to retrain in-store employees, offer free Wi-Fi to certain customers and stop selling warmed breakfast sandwiches.

In a memo to Starbucks' 170,000-plus employees Thursday, Schultz wrote that an organizational analysis over the past several weeks was at times emotional and stressful.

"I know that I am responsible for ensuring the success of the company for the long term, which means that difficult decisions must be made," he wrote.

He also announced a restructuring of Starbucks' U.S. business, including expanding from two to four geographic regions to improve support for employees. Functions like finance, human resources and marketing are being reorganized or consolidated.

More changes will be announced at the company's annual meeting March 19.

Starbucks shares fell 43 cents to $17.83 Thursday. Over the past year, the stock has traded between $17.66 and $33.14.

"I like to see action taking place, but it will be a year before we decide if these changes are significant enough to be positive for the business," said James Walsh, an analyst with Coldstream Capital Management in Bellevue, which owns Starbucks shares as part of $1.1 billion it manages.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

Copyright © 2008 The Seattle Times Company

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