Starbucks Pumps the Brakes in Its Home Market : With Schultz exiting, it’s now up to CEO Kevin Johnson to decide where to slow versus grow Americans' long-running joke about a Starbucks on every corner may be nearing its end.
The coffee behemoth is retrenching in its home market as it contends with sales growth that Chief Executive Officer Kevin Johnson acknowledges isn’t fast enough. The cafe chain said Tuesday it expects comparable sales to rise just 1 percent globally for the current quarter—the worst performance in about nine years. That’s well below the 2.9 percent analysts were expecting, according to Consensus Metrix.
Starbucks also plans to close about 150 company-operated stores in densely penetrated U.S. markets next fiscal year, three times the number it historically shuts down annually. Shares initially slid as much as 6.3 percent in late trading Tuesday before inching back up. The stock was down 1.6 percent as of 5:24 p.m. in New York.
“Our growth has slowed a bit,” Johnson said in an interview. “I expect better, I think our shareholders deserve better, and we're committed to address that.”
Although business abroad has been booming and the chain has been opening more and more cafes, U.S. sales growth has stalled for the company that brought espresso to the masses. With about 14,000 stores domestically, Starbucks is now pumping the brakes on licensed and company-operated locations, with a renewed focus on rural and suburban areas—not over-caffeinated urban neighborhoods where locals already joke that the next Starbucks will open inside an existing store.
The closing stores are often in “major metro areas where increases in wage and occupancy and other regulatory requirements” are making them unprofitable, Johnson said. “Now, in a lot of ways, it's middle America and the South that presents an opportunity.”
For the ubiquitous chain, moving slower and shutting unprofitable stores may trigger some deja vu. In 2008, longtime leader Howard Schultz returned to the company that was struggling after expanding too quickly across the U.S., giving competitors like McDonald's Corp. a chance to elbow back into breakfast. Investors cheered as Schultz retook the helm and closed some underperforming stores, and share prices at the chain have been up eight of the last 10 years. So far this year through Tuesday’s close, shares have been essentially flat......
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Poster Comment:
Yeah, they mention the big subject but it's buried way down and shorn of any moxie. The Bloomberg rag puts all the blame on the stores for the racial nonsense. I'd love to think this is a smokescreen for "fire the wacko liberal jew before he sinks us, and get a sane goy in the job". Is it? I love this news in any case -- hope they have to close lots more, starting with the one that's usurped half the floor space (and more) at my favorite grocery store.