Starbucks says it will close 150 poorly performing stores next year

Starbucks says it will close 150 poorly performing stores next year

Starbucks says it will close 150 poorly performing stores next year

The company will triple its traditional annual average of closing about 50 stores as part of a streamlining effort including rapidly optimizing its US store portfolio.

Starbucks CEO Kevin Johnson says the global coffee chain will be "leaning into" creating more plant-based beverages as consumers continue to demand vegan options.

Stifel pulled its target price down slightly, to $55, just a bit above current levels. Starbucks said it would provide additional details on its plans at an investor presentation on Tuesday afternoon.

Earlier this month, Howard Schultz stepped down as president, which fueled reports that he was gearing up for a 2020 presidential run. The stock slumped 3.5 percent in after-hours trading. Starbucks closed its USA stores on May 29 to conduct racial-bias training for its employees.

The Seattle-based company announced Tuesday that it will close approximately 150 underperforming stores in its most densely populated USA markets amid sluggish sales - up from its usual rate of 50 per year.

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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.

"It is not an excuse", for the 1 percent growth rate, Johnson added. Additionally, it plans to cut general and administrative costs, and has hired a consultant to help in this area.

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. Starbucks said it also will slow the growth of licensed stores in airports, supermarkets and other retail stores, reflecting criticism that the coffee-shop pioneer was expanding too rapidly.

Oversaturation of the market could also be an issue plaguing the coffee chain, which is why the store closings will be focused on urban areas with a higher concentration of Starbucks locations.

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