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Originally published Saturday, January 24, 2009 at 12:00 AM

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More layoffs expected at Starbucks

Seattle brokerage firm tells clients that as many as 1,000 employees not working in the cafes may be laid off.

Seattle Times business reporter

Another big round of layoffs is expected at Starbucks, possibly 1,000 people — a third of its headquarters employees — and some district managers and field employees, according to an e-mail sent to a stock brokerage's customers Friday.

"The cuts might be next week or in February," wrote Diane Daggatt, a managing director at McAdams Wright Ragen in Seattle.

Starbucks declined to comment on possible layoffs. The Seattle coffee company releases its first-quarter results on Wednesday.

No barista jobs are in jeopardy, Daggatt wrote.

That will be a relief to dispirited workers who have begun to question changes at the store level since Howard Schultz reclaimed the CEO spot one year ago this month.

At first inspired by Schultz's return to the helm, they wonder now where Starbucks is headed. Many fear for their jobs as the coffee chain's sales continue to slide, forcing Starbucks to close 616 U.S. stores and trim employees' hours.

The Seattle coffee company slashed more than 2,000 jobs last year, including 1,000 in July that included 180 positions in Seattle. At that time, about 3,500 people worked at its headquarters.

It did not disclose how many people lost jobs when it closed the U.S. stores, except to say that 300 workers from the first 50 closures were not reassigned to other locations.

"They have us cornered," said one East Coast store manager who asked not to be named. "They know the economy is bad right now, and we can't afford to walk out."

He ticked off a list of disappointments, from changes that make it harder for managers to earn bonuses, to a cut in hours that makes it harder to train baristas and keep stores clean.

Then there are the mixed messages from corporate, which leaves some store workers feeling whipsawed:

• Initially, Schultz said he was eliminating heated breakfast sandwiches because their smell overwhelmed the aroma of coffee. Then, Starbucks decided to keep the sandwiches because it found a way to minimize the smell (by subtracting a piece of cheese).

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• Early on, Starbucks held a three-hour retraining session for store workers nationwide, showing them how to properly pour espresso and foam milk. Then, it decided that a key feature of the training — pouring espresso into a clear shot glass to check quality — was not crucial after all.

• At first, stores were allotted extra hours for a new initiative to brew freshly ground coffee each day. Then, the hours were reclaimed and stores told that the extra time was always meant to be temporary.

Starbucks is operating in "an extremely challenging environment," said spokeswoman Deb Trevino. "We need to be nimble, take advantage of what we're learning and adjust quickly to changing business conditions. While we realize these changes are difficult for our partners, they are necessary for the long-term health of our business."

The malaise is not universal. Another East Coast worker said he understands why Starbucks has decided not to guarantee a 401(k) match for employees this year.

Given the stock-market crash, he figures, "if they match, they're just taking money and throwing it into a fire."

Starbucks this week made Fortune magazine's annual list of the 100 best companies to work for. Although the company slid from seventh to 24th place, Fortune raved, "Despite closing 600 stores and laying off 1,200 employees, Starbucks remains an attractive workplace, especially for part-timers seeking health insurance."

It says Starbucks' voluntary turnover is 15 percent, and that the average pay for a store manager is $45,000 a year.

Still, confusion and disappointment have grown among store workers who comment about their jobs at StarbucksGossip.com.

"If we don't catch a break this company is going to lose every great partner that it has," wrote one 10-year employee. "I am sick and tired of being blamed for not meeting my budget when the economy is in a recession. I used to be proud of my company ... now i [sic] am embarrassed and feel physically ill everytime [sic] I have to go to work."

Starbucks stock closed at $9.08 a share on Friday, down 56 percent from its yearly high of $20.68.

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

Copyright © 2009 The Seattle Times Company

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