Starbucks says it will close 150 stores next year

Signage at a Starbucks store in New York

Starbucks said its third quarter forecasts had been impacted by its decision to close 8,000 stores on the afternoon of May 29 to provide roughly 175,000 employees with anti-bias training.

The company told investors late Tuesday that it expects same-store sales to grow just 1 percent for the quarter that begins next month, lowering its previous guidance. Stock for the company dropped as much as 5 percent in after-hours trading.

"Our recent performance does not reflect the potential of our exceptional brand and is not acceptable", CEO Johnson said in the statement.

The company anticipates lower net new store growth in the United States for fiscal 2019 and said it would address rapidly changing consumer preferences by introducing new cold drinks like a mango dragon fruit beverage and focusing on growing health and wellness trends. In the past year, Starbucks has opened nearly 1,000 new stores in the Americas, which includes the U.S., Canada and Latin America.

"The competitive environment has really become a lot stronger in the USA and a lot of that is the fast-food chains really improving the quality and breadth of their offerings in terms of hot beverages and breakfast", said Bloomberg Intelligence analyst Jennifer Bartashus.

The former Chairman Howard Schultz stepped down earlier in June.

Starbucks announced Tuesday it plans to close 150 underperforming stores in the 2019 fiscal year. The overall number of stores will continue to increase, but that growth will be focused. Most of the new locations it opens will be in underserved markets.

Analysts also pointed to lower-than-expected same-restaurant sales in five of the previous six quarters at Starbucks' Americas business, which is dominated by its roughly 8,000 US cafes. "That becomes an area of concern for Starbucks". Its global comparable store sales increased 2 percent. The company said the closures will result in a slightly lower growth rate in company-operated stores.

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