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Originally published October 29, 2008 at 12:00 AM | Page modified October 29, 2008 at 11:05 PM

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Howard Schultz says Starbucks may have already hit bottom

Howard Schultz says coffee chain has seen slight improvement in October. Also, Starbucks announces partnership with Red organization to eliminate AIDS in Africa.

Seattle Times business reporter

Starbucks' business may have bottomed in the fiscal quarter ended Sept. 30, chief executive Howard Schultz told reporters during the company's leadership conference in New Orleans, Reuters reported today.

"The downturn continued in the fourth quarter, and we did see a slight improvement in the first weeks of Q1 ... which might suggest that Starbucks may have hit bottom in terms of negative transactions in our fourth quarter," Schultz said.

Compared to other companies, he said, Starbucks appears to have been early to respond to the new economic realities. Earlier this year, it cut 1,000 support jobs and announced the closure of 600 underperforming U.S. stores and 61 stores in Australia.

Separately, humanitarian and U2 lead singer Bono joined Schultz in announcing Starbucks' new partnership with Red, an organization that raises funds to eliminate AIDS in Africa.

Starbucks will contribute 5 cents from the sale of each holiday drink — peppermint mocha twist, gingersnap latte and espresso truffle — from Nov. 27 to Jan. 2 to Red's global fund. The multiyear partnership will include other Red choices for customers in the new year.

Since it was launched in spring 2006, Red has raised $112 million. It also partners with Converse, Gap and Hallmark.

The Starbucks partnership "gives us a chance to be part of something consumers do every single day," Jenifer Willig, Red's director of partners and marketing.

Michelle Gass, senior vice president at Starbucks, said the company buys coffee from 10 countries in Africa. If all its U.S. and Canadian customers bought a holiday drink each week, the resulting donation to Red would provide medicine to 15,000 AIDS patients for a year.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

Copyright © 2008 The Seattle Times Company

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