Starbucks closing cafes because performance was not acceptable

Starbucks forecast on Tuesday slower sales growth than Wall Street expected this quarter and plans to close about 150 U.S. cafes next fiscal year to boost performance, sending its shares down 2 percent after hours.

The world’s largest coffee chain is facing competition both from upscale coffee houses and lower-priced fast-food chains like McDonald’s and Dunkin’ Donuts.

It has missed analysts’ estimates for same-store sales in the U.S.-dominated Americas region in five of the last six quarters.

The company anticipates lower net new store growth in the United States for fiscal 2019 and 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.

Starbucks’ Executive Chairman and co-founder Howard Schultz said earlier this month that he is stepping away from the company on June 26, ending an era. In April, Schultz worked closely alongside Chief Executive Kevin Johnson to help limit damage to the company’s image after a racial profiling incident involving the arrest of two black men in a Philadelphia store.

Starbucks said it expects global comparable store sales to rise 1 percent in the third quarter, below the 3 percent increase estimated by analysts.

In early May, Swiss-based Nestle said it would pay Starbucks $7.15 billion for exclusive rights to sell Starbucks coffees and teas. That alliance frees Starbucks to focus on improving its mainstay U.S. cafe business, where traffic growth had stalled.

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