Starbucks Is Closing Shops and Cutting Costs as Its Turnaround Effort Continues

Core Insights - Starbucks is closing several locations in the U.S. and Canada as part of its turnaround strategy, indicating that the current approach is not viable in certain areas [2][3][8] - The company is also laying off 900 non-retail employees to reduce costs and focus resources on key growth areas [4][8] - Despite some positive signs, such as increased customer visits to revamped stores, same-store sales have been negative for the past six quarters, and store earnings have declined year-over-year [6] Company Strategy - CEO Brian Niccol stated that the closures are due to an inability to create the desired customer experience and financial viability in those locations [3] - The "Back to Starbucks" initiative aims to enhance the in-store experience, focusing on quick service and a more inviting atmosphere [4] - The company is attempting to shift customer behavior back to in-store visits, contrasting with competitors who have succeeded with drive-thru models [5] Financial Performance - Starbucks is expected to end the fiscal year with 18,300 locations, a 1% decrease from the previous year, but anticipates growth in the upcoming year [3] - Although there are signs of improvement in certain stores, overall same-store sales remain negative, and the company has faced challenges in international markets, particularly in China [6] Market Reaction - Investors initially reacted positively to Niccol's appointment as CEO, with shares rising 22% at the time [7] - However, shares have since fallen nearly 13% over the past year, indicating tempered expectations regarding the company's recovery [7]