Starbucks Announces Major Corporate Layoffs as Part of Niccol's Turnaround Plan

Starbucks shares rose 1.66% after the company announced plans to eliminate 1,100 corporate support roles and several hundred unfilled positions globally as part of CEO Brian Niccol's turnaround strategy.

Key Points:

• Corporate layoffs affect approximately 7% of the company's 16,000 support roles

• Store employees, roasting, manufacturing, and distribution workers will not be impacted

• North American VP-level leaders must now work in-office at least three days weekly

• Future corporate hires will need to be Seattle or Toronto-based

• Affected employees will receive severance packages, including pay and benefits through May 2

Financial Context

The restructuring comes after Starbucks reported flat year-over-year revenue in its latest quarter, with earnings per share dropping 23% compared to the same period last year. The coffee giant has faced four consecutive quarters of declining global same-store sales and foot traffic, which fell 4% and 6% respectively in the most recent quarter.

Strategic Direction

In a letter to employees, Niccol emphasized that the layoffs are designed to "simplify the company's structure while removing layers and duplication and creating smaller, more nimble teams." The CEO, who took the helm on September 9, is implementing his "Back to Starbucks" plan, which focuses on core coffee products, better pricing, and faster service.

"Our intent is to operate more efficiently, increase accountability, reduce complexity and drive better integration," Niccol wrote. "All with the goal of being more focused and able to drive greater impact on our priorities."

Industry Context

Starbucks isn't alone in corporate restructuring, as other restaurant chains including Bloomin' Brands and Yum Brands have recently announced similar measures to streamline operations and reduce costs.

Starbucks (D1 Interval)
Starbucks is trading near its all-time high (ATH) of $114.65. Bulls will aim to reclaim this level, while bears will attempt to push the price below the recent low of $111.48. The RSI is forming a bullish divergence with higher highs, while the MACD is tightening, signaling a potential bullish crossover. Source: xStation