By Duane D. Stanford and Joseph Galante

July 1 (Bloomberg) — Starbucks Corp. will close 600 U.S. coffee shops and eliminate as many as 12,000 jobs, the most in its history, as Chief Executive Officer Howard Schultz slows the chain’s expansion after it doubled in size in four years.

Starbucks gained as much as 7.2 percent in late Nasdaq trading after saying the reductions amount to 7 percent of its workforce worldwide. The cuts include full- and part-time employees and will come over the next nine months, the Seattle- based company said today in a regulatory filing.

Seventy percent of the stores to be shut are less than three years old, the company said. Schultz, the 54-year-old former CEO who regained the post in January, is coming to grips with Starbucks’ declining earnings and the “overgrowth'’ of the past few years, said Matthew DiFrisco, an analyst at Oppenheimer & Co. in New York.

“It shows Schultz is willing to do the tough things that are necessary,'’ James Walsh, an analyst at Coldstream Capital Management Inc. in Bellevue, Washington, said today in a telephone interview. Coldstream has $1.1 billion under management, including Starbucks shares.

Starbucks Chief Financial Officer Peter Bocian estimated the stores were taking 25 percent to 30 percent of sales from nearby locations. The closings will hurt long-term revenue projections while helping the company achieve its profit goals, Bocian said on a conference call, without elaborating.

Fewer Luxuries

Starbucks’ sales and earnings have declined as cash- strapped consumers facing record gasoline prices pull back on gourmet coffee and other luxuries. The company still plans to open 200 other company-owned stores through September 2009.

Most of the 600 stores to be closed were opened in late 2005 and 2006, Bocian said on the call with investors and analysts. During that time, more than 50 percent of the new stores had drive-through service, he said.

Consumers are driving less because of gasoline prices that have soared to more than $4 a gallon, according to separate surveys in the past two weeks by Mastercard Advisors analyst Michael McNamara and JPMorgan Securities Inc. analyst Himanshu Patel.

Most of the closings, which include 100 that were announced previously, will be completed by next March, Starbucks said. The stores are located in “all major U.S. markets,'’ the company said, without naming them. Florida and California are among the largest states affected, spokeswoman Valerie O’Neil said in an interview. Starbucks isn’t targeting any other stores for closure, Bocian said.

“I think it will be well received by the Street,'’ Sharon Zackfia, an analyst at William Blair & Co., said in an interview. “It’s pretty clear they want to enter fiscal ‘09 with a clean slate.'’

Starbucks rose 71 cents, or 4.5 percent, to $16.33 at 6:38 p.m. after the close of regular trading on the Nasdaq Stock Market, following the announcement.

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net; Joseph Galante in San Francisco at jgalante3@bloomberg.net

By DAVID JOLLY

PARIS — Christian Dior, the French fashion brand, has become the latest global company to learn a hard lesson about the danger of offending Chinese sensitivities.

Facing the possibility of a boycott of its products, the luxury company said Thursday that it had dropped the American actress Sharon Stone from its advertising in China after she suggested last week that the recent earthquakes in Sichuan Province were karmic retribution for Beijing’s treatment of Tibet.

“They had no choice” but to drop her from China, said Tom Bernardin, the chairman and chief executive of the advertising agency Leo Burnett Worldwide. “Obviously, she crossed the line.”

With the Beijing Olympic Games a few months away, and growth slowing in developed countries, luxury companies have been pouring resources into China.

“What comes through in this is the importance of the Chinese market to foreign brands,” Mr. Bernardin said. “Being successful in China, like anywhere else, means being sensitive to local conditions.”

Despite efforts to keep attention on their affairs, overseas companies have found that politics has a way of creeping into business in unexpected ways in China.

In April, the French retailer Carrefour was the focus of protests after disturbances at the Olympic torch relay in Paris, when pro-Tibetan demonstrators lunged at a Chinese torch-bearer in a wheelchair. That image, quickly available on video-sharing Web sites, set off calls for a boycott of the company. Tempers calmed, but only after the French president, Nicolas Sarkozy, dispatched an aide to soothe relations.

In 2005, Japanese businesses across China were singled out for boycotts and demonstrations after Japan sought to introduce textbooks into junior high school that played down its militarism in World War II.

Both Google and Yahoo, the two leading Internet search engine companies, have agreed to cooperate with the Chinese authorities in censoring the Web in order to maintain their access to the market.

The gaffe by Ms. Stone, which also provoked a call for boycotts of films in which she appears, brought sharp criticism from the media. Xinhua, the state-run Chinese news agency, referred to Ms. Stone in an editorial Thursday as “the public enemy of all mankind.”

A spokesman for Dior in Paris, who asked not to be identified because of company policy, said that Dior’s office in Shanghai had issued a statement Thursday in which it announced that it would stop using Ms. Stone in its advertising in China. The statement recognized that the comments had been “hurtful.”

According to the spokesman in Paris, “We also said we shared the pain of the Chinese people and earthquake victims in Sichuan.”

Ms. Stone also apologized in a statement released by Dior, in which ” and that she would “wholly devote” herself to helping earthquake victims.

Ms. Stone said last week during an interview at the Cannes Film Festival: “I’m not happy about the way the Chinese are treating the Tibetans because I don’t think anyone should be unkind to anyone else. And then the earthquake and all this stuff happened, and then I thought, is that karma? When you’re not nice that the bad things happen to you?”

The blow-up also serves as a reminder that companies, having hired celebrities to promote their wares, could end up with little control over their image if the star should stray.

“Celebrities are real people; they have opinions,” said Graham Hales, of the Interbrand consulting firm in London. When Ms. Stone spoke at Cannes, “she was talking as Sharon Stone, not the direct representative of the brand,” he added.

Celebrities are “enormously difficult to manage,” Mr. Hales said, and companies “need to carefully consider whether celebrities really work for their brands.”