Starbucks to accelerate store closings next year

Cristina Cross
June 21, 2018

Starbucks will be closing 150 poorly-performing stores in 2019.

Starbucks shares fell by as much as 7% on Wednesday after the company announced a third-quarter sales forecast that was weaker than analysts had expected.

The affected stores are located in mostly urban areas that are densely populated with Starbucks locations. "Now, in a lot of ways, it's middle America and the South that presents an opportunity".

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In previous years, the Seattle-based chain has closed an average of 50 stores a year, but this fiscal year will the demise of about 150 locations.

Starbucks has also faced backlash this spring after two black men were arrested at one of its stores in Philadelphia while waiting for a meeting to begin.

"Over the past year we have taken several actions to streamline the company, positioning us to increase our innovation agility as an organization and enhance focus on our core value drivers which serve as the foundation to re-accelerate growth and create long-term shareholder value", Johnson said. That period has seen big strategic moves in China, a globe-spanning partnership with Nestle, a high-profile racially charged incident and unprecedented corporate response, and executive chairman Howard Schultz's quasi-retirement, effective next week.

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"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. Starbucks said it also will slow the growth of licensed stores in airports, supermarkets and other retail stores, reflecting criticism that the coffee-shop pioneer was expanding too rapidly. Additionally, it plans to cut general and administrative costs, and has hired a consultant to help in this area.

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

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