retail news in context, analysis with attitude

As Howard Schultz departs Starbucks after some three decades at the helm, the company announced that it plans to close 150 underperforming cafes in the US during the coming fiscal year, a response to both heightened competition and slower-than-expected sales growth.

Reuters writes that the company 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.”

The company said, according to Reuters, that “it would look to open more stores in under penetrated markets and explore strategic options to license company-operated stores. China is the company’s biggest growth driver with same-store sales rising 4 percent in the last reported quarter.

“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.”
KC's View:
I’m a Starbucks fan, and yet somehow I feel like I’ve seen this movie before. The company had too many stores in 2008, and the number was unsustainable when the economy started to go south; too much of the company’s prosperity was keyed to new stores, not same-store growth. So it stepped back a bit, though I’ve seen the argument made that it went back to old behaviors, which means that now it has to retrench a bit.

I’m waiting to see if, in a post-Howard Schultz world, Starbucks re-evaluates its commitment to the more upscale Roastery and Reserve initiatives … because when the economy goes south again, those concepts could leave Starbucks exposed.