Starbucks plans to shutter 150 underperforming stores in its next fiscal year, about three times the number the coffee chain typically closes in a year, the company announced Tuesday.
The chain updated its current-quarter projections, saying it anticipates 1% same-store sales growth globally. That’s the slowest growth since 2009, down from a 9% same-store sales jump in 2012.
“Our growth has slowed a bit,” Starbucks CEO Kevin Johnson told Bloomberg. “I expect better, I think our shareholders deserve better, and we’re committed to address that.”
Store closures will come largely in major metro areas with steep real estate costs and high hourly wages, Johnson said in the interview. The chain also plans to slow the opening of licensed stores.
“Now, in a lot of ways, it's middle America and the South that present an opportunity,” he said.
Starbucks also announced that it will be redesigning its loyalty program to provide “customers more choice around redemptions and payment, as well as expanded personalization capabilities,” the company said in a news release. It did not provide further details.
Some 5 million new customers have registered digitally with Starbucks since April, while the chain has added 2 million active Starbucks Rewards members, the company said.
The company expects its new digital initiatives to add 1 to 2 points of same-store sales growth in fiscal year 2019.
Starbucks is also looking to streamline its general and administrative expenses, and plans to work with a consultant to identify possible areas to trim.
This has been a tumultuous time in the 47-year-old coffee company’s history. Earlier this month, Starbucks chairman and former CEO Howard Schultz announced he’ll step down at the end of June, fueling speculation he might consider a run for president of the United States. In April, the chain found itself at the center of nationwide controversy when workers in a Philadelphia unit called the police on two African-American men whom they accused of trespassing. The following month, Starbucks closed all 8,000 of its company-owned U.S. stores for a half-day training session on racial bias.