Starbucks Corp. (NASDAQ:SBUX) has made an announcement that it would close all of its Teavana outlets across the nation over the coming year. Starbucks CEO Kevin Johnson said, “We felt it was an appropriate time to take the decision and begin shutting down those stores.” The move will affect 379 stores and 3,300 employees.
Starbucks bought the Teavana chain for $620 million in late 2012. The company now believes that shutting down all its Teavana stores will help it improve its financial performance. The coffee giant said last quarter that many of its Teavana stores were a drag on results.
In April, the company announced it was reviewing its options for the struggling chain. This week, the company said in a statement, “Following a strategic review of the Teavana store business, the company concluded that despite efforts to reverse the trend through creative merchandising and new store designs, the underperformance was likely to continue.”
This is the second time this year that Starbucks has announced a course correction. In February, Starbucks ended its five-year-old Evolution Fresh venture, closing the standalone stores but keeping the juice brand.
Starbucks announced record quarterly earnings for the most recent quarter. For the quarter, Starbucks reported earnings of $691.6 million, or 47 cents per share. On an adjusted basis, it earned 55 cents per share, meeting the expectations of Wall Street analysts. Total revenue was $5.66 billion, missing estimates of $5.76 billion in revenue.
Global sales rose 4 percent at established locations for the quarter ended July 2. In the U.S., sales rose 5 percent at established locations. In its Asia unit, Starbucks’ sales rose just 1 percent at established locations. While the company reported higher average spending per visit, the frequency of customer visits was flat year-over-year.
Starbucks also lowered its full-year 2017 forecast. It now expects to see earnings per share for full-year 2017 to be between $2.05 and $2.06, lower than the previous forecast for EPS in the range of $2.08 to $2.12. The company expects revenue growth on the lower end of its previous range of 8 percent to 10 percent. The company’s shares fell as much as 5.8 percent in after-hours trading.
The company also announced a plan to buy out the 50 percent share of its Chinese partner, Shanghai Starbucks, for $1.3 billion. That move would make it the operator of all 1,300 Starbucks stores in mainland China. In a separate deal, the company is set to sell its 50 percent stake in its Taiwanese joint venture for about $175 million. That joint venture currently operates about 410 Starbucks restaurants. Both deals are set to close by early 2018.