Starbucks closing cafes, CEO calls performance ‘not acceptable’
STARBUCKS Corp forecast slower sales growth than Wall Street expected this quarter and plans to close about 150 US cafes next fiscal year to boost performance, sending its shares down 2 per cent after hours.
The world’s largest cof fee chain is facing competition both from upscale coffee houses and lower-priced fast-food chains like McDonald’s Corp and Dunkin’ Donuts.
It has missed analysts’ estimates for same- store sales in the USdominated Americas region in five of the last six quarters.
The company ant icipates 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.
S t a rbuck s ’ Exe c ut ive Chairman and co- founder Howard Schultz said earlier this month that he is stepping away from the company on June 26, ending an era. In April, Schultz worked closely alongside Chief Executive Kevin Johnson to help limit damage to the company’s image after a racial profiling incident involving the arrest of two black men in a Philadelphia store.
“It seems fairly clear that the low- hanging fruit on causing everybody to get addicted to their (Starbucks) fantastic products is kind of in the rear-view mirror,” said Tony Scherrer, director of research at Smead Capital Management.
“At least in the Starbucks heavy markets, the people that are going to drink coffee are already drinking it.”
Starbucks said it expects global comparable store sales to rise 1 percent in the third quarter, below the 3 percent increase estimated by analysts, according to Thomson Reuters. — Reuters