Starbucks, the world's largest coffee chain, announced the closure of 600 underperforming stores in the United States, resulting in over 12,000 job losses. This decision follows an earlier announcement to close 100 stores, and it's part of a larger strategy to improve profitability in the face of economic difficulties.
The closures are attributed to a combination of factors including the impact of economic downturn on consumer spending and the company's own aggressive expansion in recent years. The decision to close approximately 70% of stores operating for under 3 years highlights the financial stress Starbucks is experiencing in many locations.
Starbucks projects approximately $348 million in costs associated with the closures. The company's second-quarter profits fell by 28 percent, and the stock price has decreased significantly, prompting changes in leadership.
Despite the cutbacks, Starbucks plans to continue expanding internationally and introduce new products, aiming to improve profitability. They will also significantly reduce the number of new US stores opened in the coming year.
Analysts suggest the decision wasn't surprising, with unprofitable stores identified as the main reason for closure. It remains unclear if new product offerings and other initiatives to rejuvenate the company will be successful.