Starbucks to close 150 stores as sales growth cools

Starbucks Announces Major Store Closings Coming in 2019

Starbucks To Close 150 U.S. Stores as Sales Growth Underwhelms

Starbucks, which has dealt with significant controversy in 2018, will close 150 underperforming stores after sales have slowed down.

Starbucks said it expects same-store sales to grow 1% in its third fiscal quarter of 2017. The announcement, made at the end of the trading day, jostled investors with Starbucks shares falling about 1.6 percent after hours.

"We must move faster to address the more rapidly changing preferences and needs of our customers", Kevin Johnson, Starbucks' CEO, said in a statement.

The affected stores are mostly in urban areas densely populated with Starbucks locations, CNN Money reports.

Morgan Stanley analyst John Glass, who downgraded the stock to "equal-weight" from "overweight", expressed surprise at Starbucks' expectations for China, and said the overall forecast raised questions about the sustainability of Starbucks' growth back home. The overall number of stores will continue to increase, but that growth will be focused. According to Bloomberg News, the comparable sales performance would be Starbucks' weakest in nine years.

"In this last quarter, we had an unplanned initiative related to the incident in Philadelphia that culminated in closing stores", Johnson said on a call from the Oppenheimer Consumer Conference on Tuesday afternoon.

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. The training also delayed the launch of Starbucks' spring and summer marketing campaign by about two weeks. New cafes will continue to open in markets that demand it, the company said, and it is "actively exploring strategic options to license company-operated stores in other appropriate markets".

Starbucks says it can attract more diners in the USA with new menu items and will focus on its expanding tea business, as well as capitalizing on health and wellness trends.

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