Starbucks to Close More Stores Amid Glut of Coffee Shops

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Starbucks' Executive Chairman and co-founder Howard Schultz said earlier this month that he is stepping away from the company on June 26, ending an era. Stock for the company dropped as much as 5 percent in after-hours trading. According to Bloomberg News, the comparable sales performance would be Starbucks' weakest in nine years.

The coffee giant said Tuesday that it will close 150 US stores in its 2019 fiscal year, triple the number it has closed on average in recent years. Chief Financial Officer Scott Maw said that the closures "had an impact".

It has missed analysts' estimates for same-store sales in the USA -dominated Americas region in five of the last six quarters. He said the entire "slushy coffee" category is in decline as consumers look for healthier options.

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The coffee chain, which is still shaking off the backlash caused by the arrest of two black men in a Philadelphia store that led to the chain shutting down its stores for sensitivity and bias training, says it's pulling back new store launches in urban areas where coffee chains are abundant. At Starbucks, Frappuccino sales were down 3 percent this year through May. In addition to the lost sales on that day and the costs of the training, Starbucks delayed its seasonal marketing push, which it would have begun in mid-April. Starbucks said it would provide additional details on its plans at an investor presentation on Tuesday afternoon.

The Seattle-based company said it will close about 150 stores in fiscal 2019 in its most densely penetrated markets, 100 more than its historical average.

Johnson said Starbucks has not reached saturation point in the USA, but it will be more strategic about where it puts new stores, focusing on underpenetrated markets in "Middle America". That alliance frees Starbucks to focus on improving its mainstay USA cafe business, where traffic growth had stalled. The locations of the stores to be closed have not been released.

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