Starbucks News: The firm said that it would have 18,300 outlets in the US and Canada by the conclusion of the 2025 fiscal year, a 1% decrease from the previous year.
Starbucks plans store closures
As the business intensifies a recovery plan under new CEO Brian Niccol, Starbucks Corp. said that it would liquidate locations and slash 900 workers in a $1 billion restructuring operation.
According to the corporation, its total number of stores would decrease by 1% in the fiscal year 2025, reaching 18,300 sites in the US and Canada. Following that, it intends to expand the number of shops it runs and renovate an additional 1,000 sites.
Following an assessment of its coffee shops, the firm decided to shut many of them since it did not find a way to turn a profit. It intends to concentrate on establishments that complement Niccol’s strategy to improve the ambiance of its eateries.
Niccol outlines turnaround strategy
In a statement to staff on Thursday, Niccol said, “Early findings from coffeehouse uplifts indicate customers returning more frequently, staying longer, and leaving great comments.”
Following six consecutive quarters of same-store sales declines, Niccol, who assumed leadership of the coffee business a year ago, is making an effort to steer a turnaround. In order to promote more visits for longer periods of time, the strategy focuses on revitalizing areas by installing electrical outlets and chairs.
Despite these adjustments, the Seattle company’s financial performance has not improved much, and this is Niccol’s second wave of layoffs.
Starbucks faces growth challenges
In premarket trading, the company’s stock was up less than 1%. As of Wednesday’s end, the company’s stock was down 8%, while the S&P 500 Index had increased by 13%.
Starbucks most recently revealed fiscal third-quarter sales and profitability that fell short of forecasts. Smaller chains in the US and China, the company’s two biggest markets, are also becoming more competitive, producing cheaper drinks for consumers more quickly.
In an effort to cut wait times, Starbucks is simplifying its drink menu to create way for new offerings that better suit shifting customer preferences. As consumers look for healthier alternatives, the cafe operator has expanded its selection of sugar-free drinks and added protein-infused options.
Despite their widespread support for the revisions, analysts and investors are now leery about Niccol’s plan’s budget and schedule. Last quarter’s profitability declined as a result of the brand revitalization efforts.