Coffee retail giant Starbucks announced Tuesday its plan to close approximately 150 stores across the United States as a result of "slow growth", sending the Seattle-based corporation's stock prices down almost 7%.
Starbucks will be closing 150 poorly-performing stores in 2019.
Starbucks shares are down 7.2% for the year. Analysts had expected same-store sales to grow 3% in that period. That alliance frees Starbucks to focus on improving its mainstay US cafe business, where traffic growth had stalled.
Starbucks, which earlier this month raised its prices for the third time in three months, is also dealing with increased competition from places like McDonald's, which has improved its coffee lineup and offers lower prices on many products.More news: No need to justify family separation of migrant children: Steve Bannon
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Starbucks said it will return an additional $25 billion more to shareholders than initially planned in the form of share buybacks and dividends.
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.
The company earlier this year said the cash it got from a licensing deal with Nestle SA would go to support the company's growth in the US and China, where its expansion has been explosive.
Starbucks says it will also add more teas to its menu and plans on "capitalizing on health and wellness trends" Bloomberg notes. "But the current political environment with trade wars looming or the governments picking at each other-it definitely casts a shadow over the long-term prospects for large western brands that are in China".