Starbucks to accelerate store closings next year

Starbucks to accelerate store closings next year

FILE PHOTO: A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles, California, U.S. on October 27, 2015.

The company anticipates 1 percent growth in global sales for the third quarter. The stock slumped 3.5 percent in after-hours trading. "We must move faster to address the more rapidly changing preferences and needs of our customers".

Although business overseas has been booming and the chain has been opening more and more cafes, USA sales growth has stalled for the company that brought espresso to the masses. Management also plans to reduce the number of new licensed stores in 2019 by about 100 stores, according to CNBC.

Johnson indicated that the store closings would be mostly in major metro areas, where wage expectations and other regulations make it hard to operate at a greater profit. Starbucks will borrow to finance the buybacks, Maw said.

But now, with Schultz stepping back from his beloved company, the task of the righting the ship will fall to Johnson, who took over as a CEO just over a year ago.




Earlier this month, Howard Schultz stepped down as president, which fueled reports that he was gearing up for a 2020 presidential run. One area executives have targeted is wasted product, which costs Starbucks $500 million a year in the U.S.

Starbucks said it now expects earnings in the range of $3.23 to $3.26 a share for the current fiscal year, down about a dime from its previous targets.

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.

The chain is also relying on its digital initiatives to contribute between 1 and 2 percent to comparable sales next fiscal year. The company said the closures will result in a slightly lower growth rate in company-operated stores.

The company also said it would look to cut general and administrative expenses with plans to partner with an external consultant to speed up the process.

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