Starbucks to close 150 stores in the US
In this article (5)
Seattle-based coffee chain Starbucks announced it will close 150 underperforming company-operated stores next year, up three times from the usual rate of 50 closings a year.
The need for closures was mostly driven by slowing sales in the US, the company stated.
The global coffee chain said affected stores are those located mostly in urban areas that are already densely populated with Starbucks locations.
The company also said it expects one per cent growth in global same store sales for the third quarter, lowering its previous guidance.
Kevin Johnson, Starbucks president and CEO, said the company’s recent performance does not reflect the potential of their brand.
“While certain demand headwinds are transitory, and some of our cost increases are appropriate investments for the future, our recent performance does not reflect the potential of our exceptional brand and is not acceptable.” Johnson said. “We must move faster to address the more rapidly changing preferences and needs of our customers.”
Johnson said they have taken several actions to streamline the company over the past year, positioning it to increase their innovation agility as an organisation and enhance focus on their core value drivers which serve as the foundation to re-accelerate growth and create long-term shareholder value.
The coffee chain closed about 8,000 stores on May 29 to offer about 175,000 employees mandatory anti-bias training after two black men were arrested at a store in Philadelphia while waiting for a friend.
Questions & Answers
Q.Why is Starbucks closing so many stores in the US next year?
Why is Starbucks closing so many stores in the US next year?
The company stated that the closures are mostly driven by slowing sales in the US market. Affected stores are primarily located in urban areas that already have a high concentration of Starbucks branches, suggesting a saturation point has been reached.
Q.Which specific types of stores are being targeted for closure?
Which specific types of stores are being targeted for closure?
The global coffee chain indicated that the affected stores are those considered underperforming and company-operated. They are predominantly found in urban areas which are already densely populated with existing Starbucks locations.
Q.How does this number of store closures compare to previous years?
How does this number of store closures compare to previous years?
Starbucks is closing 150 stores, which is three times the usual rate of 50 closures per year. This represents a significant increase in the number of underperforming locations being shut down.
Q.What is the company's outlook for global sales growth in the third quarter?
What is the company's outlook for global sales growth in the third quarter?
Starbucks expects only one per cent growth in global same-store sales for the third quarter. This figure represents a reduction from their previously issued guidance, indicating a lowered expectation for sales performance.