It’s been a tough year for America’s most ubiquitous latte provider, and Chief Executive Officer Kevin Johnson’s latest news to investors has just added to the overall sense of “disappointment” in the company. Amid continued backlash from the racial bias accusations and more progressive cities raising the minimum wage, Starbucks’ earnings have fallen below expectation. In response, Johnson has decided to shut down some 150 company-operated stores.
On Tuesday, Johnson said in a statement that due to the company’s recent “not acceptable” performance, Starbucks will further “streamline” to improve its “innovation agility” and “re-accelerate growth.”
“While certain demand headwinds are transitory, and some of our cost increases are appropriate investments for the future, our recent performance does not reflect the potential of our exceptional brand and is not acceptable,” said Johnson in a statement Tuesday. “We must move faster to address the more rapidly changing preferences and needs of our customers. Over the past year we have taken several actions to streamline the company, positioning us to increase our innovation agility as an organization and enhance focus on our core value drivers which serve as the foundation to re-accelerate growth and create long-term shareholder value.”
That unacceptable performance, the company revealed, was a disappointing 1% sales increase globally in the current quarter, about a third of the expected 2.9% growth projected by analysts.
As Bloomberg explains, some of the “streamlining” Johnson referenced will come in the form of shutting down “about 150 company-operated stores in densely penetrated U.S. markets next fiscal year, three times the number it historically shuts down annually.” (Read more from “Starbucks Gives ‘Disappointing’ News Amid ‘Racial Bias’ Backlash and Minimum Wage Hikes” HERE)