Starbucks Announces Major Store Closings Coming in 2019

Starbucks Announces Major Store Closings Coming in 2019

Starbucks has not yet announced which stores will be closing.

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.

Stifel pulled its target price down slightly, to $55, just a bit above current levels. Last month, Starbucks closed about 8,000 cafes so its employees could undergo racial-bias training, which did hurt sales in the quarter, Johnson said. One area executives have targeted is wasted product, which costs Starbucks $500 million a year in the U.S. The stock slumped 3.5 percent in after-hours trading.

The company anticipates lower net new store growth in the United States for fiscal 2019 and said it would address rapidly changing consumer preferences by introducing new cold drinks like a mango dragon fruit beverage and focusing on growing health and wellness trends. Management also plans to reduce the number of new licensed stores in 2019 by about 100 stores, according to CNBC.

In May, Starbucks revealed it's selling Nestlé the rights to market, sell and distribute its packaged coffee and tea globally for more than $7 billion. That prompted Starbucks, whose executive chairman and founder and former CEO Howard Schultz is leaving the company next week, to give investors an in depth update on its plans to kickstart growth.

Historically, the Seattle-based company closes roughly 50 stores a year.

The chain, which operates more than 8,000 USA stores, said the changes were made to address the weaker-than-expected sales growth, adding that several digital initiatives were expected to add 1% to 2% in comparable sales in fiscal 2019.

Johnson laid blame for the disappointing sales growth at the feet of the once-vaunted Frappuccino, which accounted for 14 percent of revenue at company-operated stores as recently as three years ago.

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