Starbucks Shifts Executive Roles -- WSJ
July 26 2016 - 3:04AM
Dow Jones News
CEO Schultz moves his focus to company's long-term strategy and
innovation
By Julie Jargon
Starbucks Corp. said Monday it was reorganizing the roles of its
senior leaders, a week after the coffee giant said it had a
sales-target miss for the third consecutive quarter.
Chief Executive Howard Schultz said he was shifting his focus to
the company's long-term strategy and innovation efforts.
Previously, he focused on the company's digital technology
efforts.
Last week, Starbucks cited global economic uncertainty and a
"profound weakening in consumer confidence" as reasons for its
sales slowdown in the latest quarter.
Executives said the quarter, which ended June 26, was an anomaly
and a company spokesman said the organizational changes "have
nothing to do with prior quarters."
But the executives also acknowledged some missteps, including a
summer beverage promotion it delayed because it coincided with a
controversial change to its loyalty program. The new program, which
rewards customers for the amount of money they spend rather than
the number of times they visit, was met with complaints from people
who come frequently to just buy a cup of coffee.
Still, the number of active loyalty program members grew 18% in
the latest period.
In the U.S., the company's same-store sales in the quarter ended
June 26 rose 4%, compared with 8% a year earlier. Executives last
week pledged to return the U.S. business to historic levels of at
least 5% same-store sales increases.
Mr. Schultz said in a letter to employees on Monday that the
board of directors and senior leaders recently approved a long-term
growth plan that "will require a higher level of thoughtfulness,
creativity and discipline than at any other time in our
history."
Starbucks has been moving upscale lately as a way to capture the
trend toward premium coffee. For instance, earlier in July the
company announced plans to team up with luxury Italian bakery
Princi to develop and operate all new Princi locations outside of
Italy and to offer Princi baked goods in Starbucks's new specialty
coffee stores.
Under the new structure, Mr. Schultz will work closely with U.S.
and Americas Group President Cliff Burrows, who will head up a new
retail group dubbed "Siren Retail" in which his role will include
overseeing the global expansion of the Roastery stores and the
development of the Starbucks Reserve and Princi stores.
Kevin Johnson, president and chief operating officer, will lead
the Starbucks senior leadership team, while China and Asia Pacific
Group President John Culver will expand his responsibilities to
assume the role of group president in charge of Starbucks retail
sales around the world.
Starbucks last shuffled its management ranks in January 2014,
when Mr. Schultz announced he would focus on product innovation and
digital retailing.
Write to Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
July 26, 2016 02:49 ET (06:49 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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