Published: Thu, June 21, 2018
Culture | By Glenn Strickland

Starbucks to close 150 stores in 'densely penetrated markets'

Starbucks to close 150 stores in 'densely penetrated markets'

Closing stores is not new for businesses, but the 150 figure is almost three-times the average for the company.

Starbucks said it expects same-store sales to grow 1% in its third fiscal quarter of 2017.

The company anticipates lower net new store growth in the United States for fiscal 2019 and said it would take steps to address rapidly changing consumer preferences by introducing new beverages, focusing on growing health and wellness trends.

In May, Starbucks closed all of its more than 8,000 USA stores for an afternoon so that their employees could participate in "racial bias training" following an incident in Philadelphia in which a store employee called the police on two black men who were arrested for trespassing. "Now, in a lot of ways, it's middle America and the South that presents an opportunity".

In a typical year, Stabucks shutters about 50 stores.

For the ubiquitous chain, moving slower and shutting unprofitable stores may trigger some deja vu.

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Starbucks shares slipped almost 2 percent in after-hours trading. Outgoing chairman Howard Schultz said the training cost Starbucks "tens of millions" of dollars.

"The competitive environment has really become a lot stronger in the US 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.

The run of bad press has seemingly caught up with coffee giant Starbucks, as the company told investors late Tuesday that the company is preparing to close roughly 150 shops that have underperformed. "That becomes an area of concern for Starbucks".

Starbucks also said it will shift new store openings to under penetrated markets and slow licensed store growth.

The company also said it would look to cut general and administrative expenses with plans to partner with an external consultant to speed up the process. Starbucks plans to more than triple revenue in China in the next five years and open a new store every 15 hours through 2022 in that market.

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