Starbucks pulling the plug on 150 underperforming stores

Starbucks pulling the plug on 150 underperforming stores

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.

"While certain demand headwinds are transitory, and some of our cost increases are appropriate investments for the future, our recent performance does not reflect the potential of our exceptional brand and is not acceptable", Starbucks CEO and President Kevin Johnson said in a statement.

Here, Johnson says the company still has work to do to improve in-store efficiently and make the most out of its loyalty programs.

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The resulting policy change prompted the mega-retailer to allow all persons to use the restroom facilities without requiring a purchase, effectively turning the neighborhood coffee shop into what some customers described as a "homeless shelter".

Starbucks normally closes about 50 underperforming stores per year.

"Same-store sales comparisons are slowing". At Starbucks, Frappuccino sales were down 3 percent this year through May. That period has seen big strategic moves in China, a globe-spanning partnership with Nestle, a high-profile racially charged incident and unprecedented corporate response, and executive chairman Howard Schultz's quasi-retirement, effective next week. "That becomes an area of concern for Starbucks".

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Starbucks apologized and closed 8,000 stores in May for anti-bias training after the arrests of two black men in one of its Philadelphia cafes sparked wide-spread protests. In the past year, Starbucks has opened nearly 1,000 new stores in the Americas, which includes the U.S., Canada and Latin America.

On Tuesday, Starbucks said that it will return more cash to shareholders-about $25 billion in buybacks and dividends through fiscal 2020, representing a $10 billion increase from the previous guidance. The company said the closures will result in a slightly lower growth rate in company-operated stores.

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