March 19 Annual Shareholders Meeting

Eleven weeks ago, I made a personal commitment to every one of our customers and partners (employees) to reaffirm our place as the world’s coffee authority. By embracing our heritage, returning to our core – all things coffee – and our relentless commitment to innovation, we will reignite the emotional connection we have with our customers and transform the Starbucks Experience. I am confident that the ground-breaking initiatives we’ve announced today demonstrate our laser focus on living up to that commitment. We know that this is just the beginning, but we also know that there has never been a more exhilarating or promising time in our history.  Continue to  learn more  about our initiatives including  the  acquisition of  an innovative  brewing system.

Transformation Agenda Communication #7

Since I returned as ceo six weeks ago, we have experienced a lot of change in a very short period…with our renewed focus on the customer experience and the return to our core—all things coffee–as evidenced by our decision to discontinue warmed breakfast sandwiches in U.S. stores by the end of Fiscal ’08; unprecedented Art of Espresso three-hour training for U.S. store partners on February 26; free Wi-Fi for partners and customers beginning in the Spring, and more to come. I hope you view these changes as positively as I do. Together, we have created a blueprint to transform the company, and I sincerely appreciate all that you have done and will continue to do every day on behalf of Starbucks.

I pledged to communicate with you about our efforts to improve the current state of our U.S. Business, reignite the emotional attachment with our customers and make foundational changes to our business; and I have done so in six previous emails. However, this is my most difficult communication to date.

As I have mentioned in previous communications, in order to reinvigorate our company we must continually analyze and review every part of our company operations. This rigorous look at our business will ensure that we are managing and optimizing our resources as effectively as we can in order to improve the Starbucks Experience.

We realize that we are operating in an intensely challenging environment, one in which our customers and partners have extremely high expectations of Starbucks. And we have to step up to the challenge of being strategic as well as nimble as our business evolves. Unfortunately, we have not been organized in a manner that allows us to have a laser focus on the customer.

Over the last several weeks, we conducted a thorough organizational analysis, which was, at times, very emotional and extremely stressful. But as I sit at my desk and think about my responsibility to over 170,000 partners and their families who rely on me and others to preserve and enhance our company, I know that I am responsible for ensuring the success of the company for the long term, which means that difficult decisions must be made. Personally, I continue to struggle with the outcome, because I realize how painful it will be for some partners.

As the result of our review, which was done with great thoughtfulness and respect for everyone concerned, organizational changes have been made. These changes will restructure the company, but they will also result in a decrease of both the number of positions and partners by approximately 600. This total includes the elimination of existing positions and open headcount, as well as the reduction of our current workforce. Within this context, approximately 220 partners have separated from the company. Nearly all were U.S. partners serving in non-retail support roles. We are thankful and proud of the contributions our departing partners have made, and we are committed to treating them with respect and dignity.

Today, we are announcing the following modifications to our organizational structure that are designed to strengthen our focus on the customer in our U.S. field operations, and centralize and/or consolidate many of our support functions to drive functional excellence and reduce redundancies:

U.S. Field Operations
Effective Monday, February 25, the U.S. field organization will begin transitioning from two divisions to four, with full implementation completed by March 24. The new divisions are: Western/Pacific, Northwest/Mountain, Southeast/Plains and Northeast/Atlantic.

Not only will this organizational structure create more capacity for our field teams, it will enable the company to align our leaders closer to our customers and partners. This will ensure a stronger level of support in partner development, coaching and accountability in the field. Establishing a customer-centric field support structure in the U.S. Business enables our field teams to focus on our partners, customers and our coffee.

Each division will be led by a senior vice president, reporting directly to the U.S. president. Within each division, partners supporting Store Development, Marketing, Partner Resources and Finance will report directly to their respective functions while still being accountable for results at the divisional level. These teams are being centralized to create an infrastructure with global span, capability and effectiveness. Senior leaders in the U.S. Business will provide specifics in their individual team Town Hall meetings that will be held later today.

Support Functions
The reorganizations of Starbucks support functions are designed to consolidate functional activities into teams that have a shared vision and goals to support the business.

The following support functions are being reorganized and/or consolidated:

• U.S. Store Development
• U.S. Licensed Stores
• U.S. Finance
• Partner Resources
• Marketing
• In-Store Experience
• Global Supply Chain
• Global Communications
• Partner & Asset Protection

As a result of these organizational changes, some partners may have new roles or new managers. Senior leaders in these areas will provide specifics to partners in their individual team Town Hall meetings that will be held later today.

Partner Care and Support
As I said earlier in this communication, while these decisions were necessary to move our business forward, I fully recognize the personal and professional impacts these actions have on individual partners, and we are committed to making the transitions as smooth as possible.

Once again, I would like to thank all of our dedicated and passionate partners for their numerous contributions to the company.

Onward,

Howard

Transformation Agenda Communication #3

Earlier this month, we communicated our plan to transform Starbucks for the future, and we said action would come fast. It has, and I am writing today to share with you what has happened so far, and what’s next.

The new senior leadership team and I have met almost every day over the last few weeks, creating the action plan to transform our company that not only resonates with our customers, but with our people. We are dramatically changing the way we manage the company and make decisions. We are laser focused on the customer, which will enable us to transform Starbucks.

The three parts of our transformation agenda are: improve the current state of our U.S. business; reignite the emotional attachment with our customers; and make foundational changes for the long term.

We have now assigned accountabilities to our leadership team and their direct reports. They will own everything about their business and be responsible for specific projects to drive us forward in all three of these areas. We have also validated a number of programs that were already in the pipeline that will support and further our vision for the Starbucks Experience.

Some of the actions we’ve identified will occur in the near future and we have a short timeframe to make them happen. We expect that the initial result of our work will be seen in our U.S. business. Other changes will take place in the coming months.

Currently, we have identified the following action steps:

Slow the pace of U.S. store openings and accelerate internationally
We now plan to open a total of 1,175 net new stores in the U.S. this year, down more than 34 percent from our fiscal 2007 openings. That includes closing approximately 100 underperforming stores. In addition, for 2009 we plan to open less than 1,000 new U.S. stores. This fiscal year, we will also open an additional 75 net new stores in international markets, increasing the international store opening target to approximately 975 stores. In 2009 that will rise to over 1,000 stores internationally, and mark the first time that our International store openings will outpace those in the U.S.

This will allow us to optimize our resources and potentially reduce cannibalization from existing stores.

By the end of fiscal year 2008, discontinue warmed breakfast sandwiches at our North American stores
We made this decision because, in short, the scent of the warmed sandwiches interferes with the coffee aroma in our stores, which is key to the coffee experience that forges our connection with customers. Moreover, while our customers liked our sandwiches, they told us that they missed the aroma of coffee. We will continue offering warmed pastries and selling lunch, but there will be some modifications to the line up, as is our normal practice. The highest priority for our food team is to develop the right offerings to complement our superior coffee and espresso beverages.

Manage our business the right way
We are giving ourselves and the financial community a new way to measure our progress, which we believe is a more thoughtful approach to managing our business for the long term. Going forward, we will not report same store sales comps as they will not be an effective indicator of our performance and we will no longer give annual guidance beginning in 2009 and beyond. I believe that this will help us make better decisions and focus on the customer, while building long-term shareholder value.

Reinvent partner training
In the coming months, you will see a renewed level of commitment to providing superior training for our retail partners. We will invest in tools and provide them with the resources they need to exceed customer expectations.

Reinstate regularly scheduled open forums
As you know, we believe passionately that when we invest in our people, build an emotional connection with each other and fully engage every partner in our strategy and agenda, we see positive results. Therefore, effective immediately, we are reinstating regularly scheduled open forums in the field.

Bring back the Leadership Conference
We believe that this is the most important and strategic event that we can hold for our store managers and above, because this is another way to build understanding of our vision and strategy, as well as connect and help continue career development. We will hold our leadership conference in Fall 2008. Details will be forthcoming, so stay tuned. And I promise you that it will not be cancelled!

These and future actions will reaffirm for customers and the market that, unlike others, we are not a reseller of commodity-based coffee roasted by a third party. We never have been and we never will be. We will utilize our 35-plus years of ethically sourcing, buying and roasting the finest coffee in the world to reaffirm our coffee authority.

We will continue to communicate with you about our progress. We plan to do so, once again, at our Annual Meeting of Shareholders on March 19, when we will lay out five specific, bold “consumer-facing” initiatives that will be a major catalyst for change and transformation. They will extend our coffee leadership; ensure that our stores are the third place for the next decade; encourage a deeper dialogue with our customers; and further strengthen our partners’ and customers’ relationships with one another. And this is just the beginning!

On another note, we have received a lot of attention in the last week about the $1 brewed coffee 8 ounce short test. Testing is a way of life for us as we continue to find ways to enhance the customer experience. Right now, as a test, it makes sense to us. I’d like to reiterate that Starbucks is built on premium coffee and a premium experience. We intend to maintain our leadership position at the high end, while broadening our appeal. And similar to other leading global consumer brands, we believe there are opportunities to create segmentation, provide an entry point for new customers, and generate trial in a way that will also maintain the value of our core brand proposition.

What you can expect in the near term
Over the next several days, you will hear from your manager about the specific role you and your team plays in executing our transformation agenda. We will continue to conduct a thorough and rapid review of every part of our business to ensure we are using our resources as effectively as we can to continually improve the Starbucks Experience.

Most importantly, I ask everyone to please keep your ideas coming and your enthusiasm high. It is the passion and dedication of our partners that are critical elements in bringing to life the creativity and innovation that will drive our ongoing success. Our customers see your commitment, your excitement – and they respond.

Executing our agenda takes each and every one of us. Thank you for your excitement, and your continued focus on helping to build the best Starbucks Experience for our customers and for each other. We know what we need to do to be the best, and we will do it.

Onward,

Howard

Leadership Team to have Laser Focus on the Customer Experience

We released the first of many changes. Here’s the official document as “Transformation Agenda Commnication #2:

Howard Schultz, chairman, president and chief executive officer of Starbucks Coffee Company (NASDAQ:SBUX), today announced the Starbucks leadership team who will be directly responsible for executing the Company’s transformation agenda. The changes are designed to focus the organization on providing customers with a superior Starbucks Experience and building on Starbucks legacy of innovation.

Schultz will continue to work with Martin Coles, chief operating officer; Pete Bocian, chief financial officer and chief administrative officer, and Paula Boggs, executive vice president, Law and Corporate Affairs; as well as the following direct reports in new roles and/or positions:

- Terry Davenport will be promoted to senior vice president, marketing, and will lead a new Marketing and Brand Strategy function. Davenport and his team will be responsible for the Company’s overall marketing plan and calendar, product development, consumer insights and innovation for food and beverage and unifying Starbucks brand to the customer;

- Harry Roberts, a former Starbucks executive, is returning to the Company as senior vice president and chief creative officer. In this newly created role, Roberts and his team will be responsible for the customer in-store experience, including creative expression, merchandise strategy and the overall “look and feel” of the Company’s stores;

- Michelle Gass will assume the role of senior vice president, Global Strategy, office of the ceo, and will work to implement all aspects of the transformation plan;

- Chet Kuchinad has been promoted to executive vice president, Partner Resources, and will lead the Company’s development and execution of its innovative human resources strategy;

- An executive will be hired to lead Global Real Estate Design and Architecture and an executive will be identified to head the Public Affairs function, which includes Global Communications and Corporate Social Responsibility.

With the Company’s renewed focus on customer engagement, Chris Bruzzo has been named to the newly created position of vice president, chief technology officer, and will also serve as acting chief information officer. Bruzzo will leverage technology to create innovative ways for Starbucks to connect with our customers and build loyalty programs. In this capacity, Bruzzo will report to Coles.

“As the leader of this talented senior executive team, I accept full responsibility for and am totally committed to the in-store customer experience,” Schultz said. “I will be directly engaged in ensuring a superior experience for our customers. Everything that touches the customer will be a priority. Change will not happen overnight. It will evolve over time, but I ensure you a positive change will occur. I, along with our dedicated partners (employees), will strive to exceed the expectations of our customers every day.”