Starbucks closing cafes; CEO calls performance 'not acceptable'

Starbucks says it will close 150 poorly performing stores next year

Starbucks says it will close 150 poorly performing stores next year

The coffee giant said Tuesday that it will close 150 USA stores in its 2019 fiscal year, triple the number it has closed on average in recent years.

The Seattle-based company said it would close underperforming stores in "densely penetrated markets" and slow its rate of store growth.

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".

Starbucks said it expects global comparable store sales to rise 1 percent in the third quarter, below the 3 percent increase estimated by analysts, according to Thomson Reuters I/B/E/S.

The store closings will reportedly be focused on urban areas with a higher concentration of Starbucks locations. It says it generally averages closing up to 50 stores a year.

And not to be overlooked is the incident at a Philadelphia location that resulted in two black men being arrested after an employee called the police on them for being in the store without ordering anything. 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.

"We must move faster to address the more rapidly changing preferences and needs of our customers", Kevin Johnson, Starbucks' CEO, said in a statement.

The changes came weeks after Starbucks Executive Chairman Howard Schultz announced he would leave the role in June. Starbucks closed its USA stores on May 29 to conduct racial-bias training for its employees.

In early May, Swiss-based Nestle (NESN.S) said it would pay Starbucks $7.15 billion for exclusive rights to sell Starbucks coffees and teas.

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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