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

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

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

It hasn't announced which Starbucks will close yet but said they will be company-owned stores in urban areas that have multiple nearby locations, the company said in a statement.

The company also said it expects 1 percent growth in global sales for the third quarter, a period that encompassed an uproar over the arrest of two black men at a Philadelphia Starbucks. And Tesley Advisory Group downgraded the stock to "market perform", cutting its share price target from $70, among the Street's highest, to $60, "pending stabilization in Starbucks' volatile trends".

"Our recent performance dos not reflect the potential of our exceptional brand and is not acceptable", he said.

Starbucks said it will return an additional $25 billion more to shareholders than initially planned in the form of share buybacks and dividends.

"The competitive environment has really become a lot stronger in the USA and a lot of that is the fast-food chains really improving the quality and breadth of their offerings in terms of hot beverages and breakfast", said Bloomberg Intelligence analyst Jennifer Bartashus.

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

The controversy was the biggest public relations test yet for new Starbucks Chief Executive Kevin Johnson, who already was fighting to boost traffic to Starbucks amid competition from coffee sellers ranging from hipster cafes to fast-food chains and convenience stores.

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As for store closures, Johnson said the ones it's targeting are unlikely to be moved or replaced, with their business ideally moving to other shops and raising overall system performance.

The changes came weeks after Starbucks Executive Chairman Howard Schultz announced he would leave the role in June.

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

Analysts also pointed to lower-than-expected same-restaurant sales in five of the previous six quarters at Starbucks' Americas business, which is dominated by its roughly 8,000 US cafes.

The chain is also relying on its digital initiatives to contribute between 1 and 2 percent to comparable sales next fiscal year.

Starbucks also said it will shift new store openings to under penetrated markets and slow licensed store growth. Additionally, it plans to cut general and administrative costs, and has hired a consultant to help in this area.

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