The run of bad press has seemingly caught up with coffee giant Starbucks, as the company told investors late Tuesday that the company is preparing to close roughly 150 shops that have underperformed.
In a statement, Starbucks CEO Kevin Johnson said that the company's recent growth-expected to hit just 1 percent in the quarter beginning next month-is "unacceptable" and the company will need to "move faster", in order to meet the needs of customers. The stock slumped 3.5 percent in after-hours trading, according to a Starbucks press release.
The affected stores are located in mostly urban areas that are densely populated with Starbucks locations.
Morgan Stanley analyst John Glass, who downgraded the stock to "equal-weight" from "overweight", expressed surprise at Starbucks' expectations for China, and said the overall forecast raised questions about the sustainability of Starbucks' growth back home.
The former Chairman Howard Schultz stepped down earlier in June.
Starbucks said Tuesday it plans to close about 150 poorly performing locations next year.
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"At least in the Starbucks heavy markets, the people that are going to drink coffee are already drinking it".
Starbucks says it can attract more diners in the US with new menu items and will focus on its expanding tea business, as well as capitalizing on health and wellness trends. One area executives have targeted is wasted product, which costs Starbucks $500 million a year in the U.S.
The chain is also relying on its digital initiatives to contribute between 1 and 2 percent to comparable sales next fiscal year.
Starbucks also announced a number of strategic changes.
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.
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".