Starbucks Corp. will be closing all 379 of its Teavana retail units over the coming year, the company said Thursday.
“Many of the company’s principally mall-based Teavana retail stores have been persistently underperforming,” the Seattle, Wash.-based coffee giant said in releasing third-quarter earnings.
“Following a strategic review of the Teavana store business, the company concluded that despite efforts to reverse the trend through creative merchandising and new store designs, the underperformance was likely to continue,” the Starbucks said in a statement.
Starbucks said the closures will come over the next year, with the majority in spring 2018. Starbucks paid $620 million in cash for Teavana in 2012, bringing the brand into its Starbucks stores as well as at mostly mall-based retail outlets.
“The approximately 3,300 partners impacted by these closures will receive opportunities to apply for positions at Starbucks stores,” the company said.
Kevin Johnson, Starbucks CEO, had warned of troubles with the Teavana brand in the second-quarter earnings call in April. “We have launched a review process and intend to take clear action to improve the performance of our Teavana mall store portfolio,” he said at the time.
Johnson on Thursday said the Starbucks stores had performed well in the quarter “despite the softness impacting our principal sectors overall.”
Same-store sales worldwide increased 4 percent in the quarter, with U.S. same-store sales increasing 5 percent. The U.S. increase was driven by average ticket growth of 4 percent and transactions growth of 1 percent, with adjustments for changes in the Starbucks Rewards loyalty program from frequency to spending in third quarter 2016.
Same-store sales in China increased 7 percent, driven by a 5 percent increase in transactions, the company said.
Earlier Thursday, Starbucks said it had agreed to acquire the remaining 50 percent of its East China joint venture in a $1.3 billion deal that will give the company full control over 1,300 locations in the fast-growing market.
For the third quarter ended July 2, Starbucks reported earnings were down 8.3 percent to $691.6 million, or 47 cents a share, from $754.1 million, or 51 cents a share, in the same period a year ago. Revenues were up 8.1 percent to $5.7 billion from $5.2 billion in same quarter last year.
The company opened 575 net new stores globally in the third quarter, bringing its total to 26,736 stores across 75 countries.
Contact Ron Ruggless: [email protected]
Follow him on Twitter: @RonRuggles