SBUX Starbucks Corporation

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)

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