Starbucks plans to close 150 locations

Starbucks plans to close 150 locations

Starbucks plans to close 150 locations

Starbucks Corp. (SBUX) plans to close 150 company-owned stores next year and put the brakes on the number of new licensed stores it opens.

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

On a conference call with analysts, CEO Kevin Johnson said those regions include the Midwest and the South, where Starbucks is far less ubiquitous than it is in Manhattan and Washington, D.C. The news was reminiscent of Starbucks' efforts a decade ago to close stores following years of aggressive expansion that led to softening comparable sales growth.

Starbucks shares fell by as much as 7% on Wednesday after the company announced a third-quarter sales forecast that was weaker than analysts had expected.

If you sometimes get the impression there is a Starbucks (sbux) on every street corner in major USA cities, you're not that far off mark. It says it generally averages closing up to 50 stores a year.

The firm organized the session following the public outcry over two black men getting arrested for sitting at one of the tables without ordering a drink.

"The company's streamlining initiatives will enable greater agility in adapting more quickly to changes in consumer preferences, " the company stated. Outgoing chairman Howard Schultz said the training cost Starbucks "tens of millions" of dollars.

Starbucks shares slipped almost 2 percent in after-hours trading. It also said that it would return about $25 billion in cash to shareholders through buyback programs as well as dividend offerings - which was about a $10 billion increase from the previously announced target. Starbucks closed its US stores on May 29 to conduct racial-bias training for its employees.

"It is not an excuse", for the 1 percent growth rate, Johnson added.

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