Starbucks announced plans Tuesday to close over 100 underperforming stores in locations where it already has a strong presence.
In May, Starbucks closed all of its more than 8,000 US 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.
The iconic coffee chain, which typically shuts down about 50 stores per year, said in a statement that the closures will occur mostly in "densely penetrated markets". In the past year, Starbucks has opened nearly 1,000 new stores in the Americas, which includes the U.S., Canada and Latin America.
"Our growth has slowed a bit", said Starbucks CEO Kevin Johnson.
Starbucks says it will accelerate its store closings in the US next year to counter cooling sales growth. U.S.net store growth peaked at 6 percent in Starbucks' 2017 fiscal 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, he added. And Tesley Advisory Group downgraded the stock to "market perform", cutting its share price target from $70, among the Street's highest, to $60, "pending stabilization in Starbucks' volatile trends". Additionally, it plans to cut general and administrative costs, and has hired a consultant to help in this area.
In March, Rosalind Brewer, Starbucks' COO, also said the market for vegan food was significant and that the company was working on launching more plant-based food and drinks. It will also try to optimize the store formats it offers, from small mobile-order pickup locations to drive-through to more elaborate high-end Roastery and Reserve stores.