Starbucks responded to a racial furor by hiring Eric Holder and bumping a Jewish group objected to by anti-Semitic black nationalists. But closing its coffee shops to give employees implicit bias training doesn’t seem to have dealt with the overpriced coffee place’s real problems.
And they’re big.
Starbucks isn’t getting the growth numbers it needed in China. Meanwhile it’s closing 150 stores in the U.S. And the downgrades are kicking in.
Starbucks hasn’t met experts’ estimates for same-store sales in the Americas for five of the last six quarters, and the chain is struggling with potentially too many U.S. stores – projecting same-store sales growth of just 1 percent for Q3 2018. Most of the impending closings should affect “underperforming stores in densely populated urban areas,” the company said in a statement to Entrepreneur.
Starbucks is oversaturated. And has been that way for a while. It’s also a trend from another generation. That trend isn’t catching on. It’s slowing and faltering.
On Tuesday Starbucks lowered its global third-quarter same store sales growth forecast to 1 percent versus the previous forecast of 3 percent.
“Facing now what is clearly decelerating top-line in its two key markets, SBUX is now saddled with increased EPS risk and a poor recent track record of driving sales,” analyst John Glass said in a note to clients Wednesday. “We see this stock as range bound, at best, near-term as the catalyst for a US comp recovery remains elusive, offset by a valuation that has been compressing over the past 2+ years.”
Starbucks shares are down 5 percent in early trading Wednesday.
With no direction to grow, it becomes increasingly obvious that Starbucks seized on the recent racial issues to buff up its image.