In his first year on the job, Niccol has zeroed in on investing in Starbucks’ stores to reduce service times and restore a coffee-house environment, while also trimming management layers

International News via Reuters:

Starbucks said on Thursday it would shutter underperforming stores in North America and cut 900 jobs in a $1 billion restructuring effort, as CEO Brian Niccol presses ahead with his plan to revive the company’s fortunes.

In his first year on the job, Niccol has zeroed in on investing in Starbucks’ stores to reduce service times and restore a coffee-house environment, while also trimming management layers.

The company has posted six straight quarters of sales decline in the U.S. as demand for its pricey lattes took a hit from consumers turning picky and competition ramping up.

“During the review, we identified coffeehouses where we’re unable to create the physical environment our customers and partners expect, or where we don’t see a path to financial performance, and these locations will be closed,” Niccol said in a letter to employees.

The company expects a majority of the store closures to be completed by the end of this fiscal year, taking its company-operated store count in North America down by about 1%.

The CEO said the company would end the fiscal year with nearly 18,300 total Starbucks locations – company operated and licensed – across the U.S. and Canada. This compares to the 18,734 locations disclosed in a July regulatory filing.

INVESTING IN QUICKER SERVICE

Niccol has enjoyed the confidence of investors since taking over after his leadership at Chipotle Mexican Grill where he is credited with leading a turnaround at the burrito chain.

“I continue to like the turnaround story here as we continue to get more visibility into the future. The company has always invested in innovation and becoming more lean will enhance the story moving forward,” said Dave Wagner, portfolio manager at Aptus Capital Advisors, which holds Starbucks stock.

Starbucks said on Thursday the job cuts would be in its support teams and added the company would also close many open positions.

The company employed about 10,000 people in non-coffee-house roles in the U.S., as of September 29, 2024.

“This is a more significant action that we understand will impact partners and customers,” Niccol said.

At the same time, Starbucks is investing to improve staffing and incorporate technology to more efficiently sequence orders at its coffee shops and enhance customer experience.

The company said earlier this year it would eliminate 1,100 corporate roles. In August, it also announced a modest 2% hike to all salaried employees in North America this year.

Starbucks shares were down marginally in early trading. They have risen about 9% since Niccol took over in August 2024.

Reporting by Juveria Tabassum in Bengaluru; Editing by Leroy Leo and Sriraj Kalluvila

The probe will examine whether Spotify favors certain rights holders in its algorithms, and whether its subscription pricing in Turkey is set at levels that unfairly hinder competitors

International News via Reuters:

Turkey’s competition authority said on Thursday that it has launched an investigation into Spotify to look into possible discriminatory practices and predatory pricing in the online music streaming market.

The probe will examine whether Spotify favors certain rights holders in its algorithms, and whether its subscription pricing in Turkey is set at levels that unfairly hinder competitors and rights holders, the antitrust authority said on its website.

Reporting by Ezgi Erkoyun; Editing by Daren Butler

The push into new territories is part of CEO Daniel Erver’s strategy to revive performance and boost profitability of one of the world’s largest apparel retailers

International News via Reuters:

Fashion retailer H&M is seeking to expand in emerging markets such as Brazil and India, its CEO said on Thursday, as consumer spending weakens in Europe, its core region, and U.S. tariffs weigh on demand in its second-largest market.

The push into new territories is part of CEO Daniel Erver’s strategy to revive performance and boost profitability of one of the world’s largest apparel retailers by improving its brand appeal and responding faster to fashion trends. 

The company is working to fend off competition from Inditex-owned Zara and Shein.

BRAZIL EXPANSION MARKS LATIN AMERICA PUSH

H&M opened its first store in Brazil in August, in an upscale mall in Sao Paulo. Two more are planned by the end of November with an additional four for 2026 – including in Rio de Janeiro.

“In some of these markets that we haven’t really penetrated… we see a bigger opportunity for growth, Brazil being one, Latin America in general being one, and India being another,” Erver told Reuters.

Erver said he is cautious about consumer demand in the U.S. in the fourth quarter, as U.S. tariffs on imports have driven some retailers to hike prices amid declining consumer confidence.  

STORE COUNT HITS LOWEST SINCE 2016

The expansion in Brazil and other emerging markets comes as H&M has sharply reduced its global footprint, closing stores rapidly since the pandemic. 

H&M’s global store numbers are down 19% from the peak at the end of 2019, with 4,118 stores worldwide by the end of last month – its lowest since mid-2016. It plans to shut 200 stores during 2025 in total, primarily in mature markets. Zara-owner Inditex has also reduced its store numbers to 5,528 at the end of July.

In addition to entering new regions, H&M has opened flagship stores in prime tourist and shopping districts, including Paris’ Le Marais and Shanghai’s Huaihai Road, to appeal to style-conscious consumers.

Danske Bank analyst Daniel Schmidt said it was uncertain how quickly the Brazil expansion would translate into improved performance.

“It remains unclear how much this could affect sales growth next year,” said Schmidt. “But of course, it’s encouraging that they’ve been well received so far.”

PREMIUM BRAND COS TARGETS INDIA

H&M’s premium brand, Cos, which offers items such as $149 dresses and $299 cashmere jumpers, is set to launch in India with a store in Delhi during the fourth quarter, according to Erver.

“You see in many of the emerging markets that there are great opportunities for affordable luxury positioning, and India is one super interesting market to explore for Cos,” said Erver, adding that he plans to visit India in the coming weeks. 

H&M also plans a broader expansion in Latin America, launching in Venezuela in the fourth quarter and Paraguay next year, having opened in El Salvador earlier this month. 

Reporting by Helen Reid in London and Greta Rosen Fondahn in Stockholm, Editing by Louise Heavens

The Irish airline, Europe’s largest by passenger numbers, had flights disrupted when Poland shot down several Russian drones earlier this month

International News via Reuters:

Drone disruption is likely to become an irritant for the airline industry but is unlikely to affect profitability, Ryanair boss Michael O’Leary said on Thursday. 

It is governments rather than airports or airlines who should cover the cost of defending against them, he added. 

The Irish airline, Europe’s largest by passenger numbers, had flights disrupted when Poland shot down several Russian drones earlier this month. Drone incursions this week have closed airports in Denmark and Norway, further exposing the vulnerability of European airspace. 

In an interview following a news conference in Dublin, O’Leary said drones were less likely to cause persistent disruption than air traffic control worker strikes.

“It is going to be an irritant. I’m not sure it’s going to be constant,” O’Leary said. “It’s hard to believe it will impact the  business in a significant way…. It disrupts our operations. We recover pretty quickly. You know, the airlines are used to dealing with that.”

Asked whether airlines or airports should cover the cost of protecting against drones, O’Leary said the issue was for governments. 

“This is a security issue for national governments. It’s not something you’d ask airports to do.”

O’Leary said defensive technology around airports was improving but that governments would need to make significant investments to boost defences. 

Authorities should assume that incidents like last weekend’s cyberattack that disrupted operations at several major European airports are geopolitical unless proven otherwise, he said. 

“Our first instinct should be assume it’s geopolitical or it’s a bad state actor, unless there’s evidence to the contrary,” he said.

Reporting by Conor HumphriesWriting by William JamesEditing by Paul Sandle