Starbucks Founder Returns as CEO; Ex-Grocer Donald Out

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Starbucks Founder Returns as CEO; Ex-Grocer Donald Out

SEATTLE - With the company he founded and grew into a retail coffee powerhouse under siege, Starbucks' chairman Howard Schultz is returning to the c.e.o. post as well, edging out ex-grocery exec Jim Donald who has been chairman since march 2005.

The top-level executive switch is part of a series of initiatives being launched by Starbucks' board aimed at refocusing the chain on providing customers with "the distinctive Starbucks Experience," building on Starbucks legacy of innovation, and stemming a slide in performance.

"Howard is the architect of the Starbucks brand and the visionary behind the unique customer experience that is at the heart of this remarkable company's success," said Craig Weatherup, chairman of the Starbucks board's nominating and corporate governance committee. "Given what the board believes needs to be done, there is no better person to drive change and ensure that Starbucks is positioned to innovate, execute, and relentlessly focus the entire organization on the customer."

Schultz was c.e.o. from 1987 to 2000. During his reign, the retailer went public in 1992 and experienced strong U.S. and international growth. From 2000 onward, in his role as chairman, Schultz focused on the company's global strategies and expansion, which now includes a significant and growing presence in 43 countries.

Now restored as c.e.o., he will be responsible for the overall strategic direction of the company, with a predominant focus on everything that touches the customer. Martin Coles, chief operating officer, will work closely with Schultz and have oversight responsibility for all operational aspects of the business.

"We must address the challenges we face and we know what has to be done," said Schultz. "Put simply, we are recommitting ourselves to what has made Starbucks and the Starbucks Experience so unique: ethically sourcing and roasting the highest quality coffee in the world; the relentless focus on the customer; the trust we have built with our people, and the entrepreneurial risk-taking, innovation and creativity that are the hallmarks of our success."

Schultz said his agenda will include:
- Improving the current state of the U.S. business by refocusing on the customer experience in the stores, new products and store design elements, and new training and tools for the company's store partners to help them give customers a superior experience;
- Slowing the company's pace of U.S. store openings and closing a number of underperforming U.S. store locations, enabling Starbucks to renew its focus on its store-level unit economics;
- Re-igniting the emotional attachment with customers and restoring the connections customers have with Starbucks coffee, brand, people and stores;
- Re-aligning Starbucks organization and streamlining the management to better support customer-focused initiatives and reallocating resources to key value drivers; and
- Accelerating expansion and increasing the profitability of Starbucks outside the U.S., including redeploying a portion of the capital originally earmarked for U.S. store growth to the international business.

Jim Donald, meanwhile, is leaving the company he joined in 2002 as president of its North American unit, which a reputation as a turnaround guy with a deep background in the grocery business. He was the first non-homegrown leader at Starbucks.

Donald started in 1971 as a trainee with Publix Super Markets, Inc. He joined Albertson's in 1976, climbing through the ranks in the chain's Florida, Alabama, and Texas divisions.

Donald was also a Wal-Mart alum, picked by founder Sam Walton in 1991 to boost the mega-chain's grocery business for via the supercenter.

He also served as president of Safeway's 130-store Eastern Division from 1994 to 1996.

Donald joined Pathmark Stores, Inc. in 1996 as chairman, president and c.e.o., his last stop in the food game before finding his way to Starbucks.