Over the next 18 months, Starbucks will shut down up to 400 company-operated shops while also accelerating the expansion of convenience-led formats like curbside pickup, mobile-only pick-up locations and drive-thrus.
The coffee giant headquartered in Seattle disclosed that the moves are prompted by changes in consumer preferences that shifted due to the ongoing global health crisis. Starbucks shuttered shops in middle of March and shifted to a to-go platform in other locations.
Starbucks said in its latest filing with the Securities and Exchange Commission that it eventually plans to open around 300 new North American stores specializing in carry-out and delivery options.
The change in operational strategy would mean the shutdown of up to 400 company-owned shops over the next 18 months in relation with the opening, over time, of a bigger number of new locations with creative store formats, Starbucks wrote in the SEC filing.
The company stated that its retail strategy is aimed at enhancing customer experience, boost retail footprint and allow sustainable potential growth.
The coffee behemoth wants to get customers back into the daily routine of enjoying their product, Alex Susskind, associate dean for academic affairs at Cornell University's School of Hotel Administration, stated. "Emphasizing the to-go element will make it easier for Starbucks to reach everybody consistently," he said.
Starbucks expects to lose over $3 billion in sales due to the latest coronavirus in its fiscal third quarter but said the damage to its business would subside for the remainder of 2020.
In the regulatory filing, Starbucks added that the crisis will also slash its operating income between $2 billion to $2.2 billion for the quarter ending June 28. The group plans to report the results of its third quarter on July 28.
The company's shares fell more than 3 percent in early Wednesday trading. This year, the stock, which has a market value of $92.6 billion, fell 10 percent.
Starbucks, which withdrew its previous outlook in April, expects a net loss per share of 64 cents to 79 cents and modified losses per share of 55 cents to 70 cents for the quarter ending June 28. Yet it expects to increase its sales for the fourth quarter of the fiscal year.
The company forecasts a net income per share from 11 cents to 36 cents and adjusted earnings per share from 15 cents to 40 cents and expects a healthy cash flow per week by the end of June.
Meanwhile, in China, same-store sales were down 14 percent at the end of May. This figure compares to a 77 percent drop in February. Starbucks reported that most stores in the country have returned to pre-pandemic operating hours and 70 percent are now offering full cafe seating to customers.
