Starbucks closing 150 stores

Adjust Comment Print

Starbucks will close 150 poorly performing stores in 2019.

Starbucks also told investors it expects same-store sales to grow 1 percent globally in the third quarter of 2018.

Starbucks Corp (SBUX.O) shares fell more than 8 percent on Wednesday after a disappointing sales forecast from the US coffee chain prompted Wall Street analysts to question the sustainability of its growth at home and in its next biggest market, China.

The company anticipates lower net new store growth in the United States for fiscal 2019 and said it would take steps to address rapidly changing consumer preferences by introducing new beverages, focusing on growing health and wellness trends.

Starbucks plans to improve its food options and shift from sugary drinks to "lean into more plant-based beverages".

Although business overseas has been booming and the chain has been opening more and more cafes, US sales growth has stalled for the company that brought espresso to the masses.

"At least in the Starbucks heavy markets, the people that are going to drink coffee are already drinking it".

The closing stores are often in "major metro areas where increases in wage and occupancy and other regulatory requirements" are making them unprofitable, Johnson said.

Starbucks shares are down 7.2% for the year.

He'd relinquished his CEO title to Johnson in April 2017.

Oversaturation of the market could also be an issue plaguing the coffee chain, which is why the store closings will be focused on urban areas with a higher concentration of Starbucks locations.

Outgoing Starbucks chairman Howard Schultz acknowledged at the time that the racial bias training closures would cost "tens of millions" but that he saw the closures as an investment in Starbucks employees. It also said that it would return about $25 billion in cash to shareholders through buyback programs as well as dividend offerings - which was about a $10 billion increase from the previously announced target.

Comments