Starbucks to accelerate store closings next year

Starbucks says it will close 150 poorly performing stores next year

Starbucks Corp. said it will close more coffee shops in the increasingly crowded US market where it was a pioneer.

The company said comparable sales growth at existing stores, a key measure of retail performance, was expected to be just 1 percent in the current quarter, despite a booming economy and a broadly healthy restaurant industry.

Starbucks shares slipped almost 2 percent in after-hours trading.

"We must move faster to address the more rapidly changing preferences and needs of our customers."Our recent performance does not reflect the potential of our exceptional brand and is not acceptable", CEO Kevin Johnson said in a statement". Most of the stores slated for closures are located in big cities, where there is already an overabundance of Starbucks cafes. That's well below the 2.9 percent analysts were expecting, according to Consensus Metrix.

With Wednesday's decline, Starbucks' shares were on track to enter negative territory for 2018 - a year in which co-founder Howard Schultz stepped down as executive chairman and the company found itself at the center of an embarrassing racial profiling incident. Notably, as from 2019, it plans to shift its focus for new stores in the USA away from areas where it already has a strong presence and to underserved markets.




In early May, Swiss-based Nestle said it would pay Starbucks $7.15 billion for exclusive rights to sell Starbucks coffees and teas.

Starbucks announced Tuesday it plans to close 150 underperforming stores in the 2019 fiscal year. That alliance frees Starbucks to focus on improving its mainstay USA cafe business, where traffic growth had stalled.

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. "That becomes an area of concern for Starbucks".

Starbucks said it would look to open more stores in under penetrated markets and explore strategic options to license company-operated stores.

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