FILE PHOTO: A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles, California, U.S. on October 27, 2015.
Starbucks Chief Financial Officer Scott Maw reportedly acknowledged that the incident "had an impact" on the low same-store sales growth rate of 1 percent expected for the quarter beginning next month. "We must move faster to address the more rapidly changing preferences and needs of our customers".
Morgan Stanley analyst John Glass, who downgraded the stock to "equal-weight" from "overweight", expressed surprise at Starbucks' expectations for China, and said the overall forecast raised questions about the sustainability of Starbucks' growth back home. That prompted Starbucks, whose executive chairman and founder and former CEO Howard Schultz is leaving the company next week, to give investors an in depth update on its plans to kickstart growth. The store closings will reportedly be focused on urban areas with a higher concentration of Starbucks locations.
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When Starbucks released its second-quarter earnings in late April, the chain had net revenues of $6 billion, a 13.9 percent increase from $5.29 billion in the same period in fiscal year 2017.
Starbucks Corp forecast on Tuesday slower sales growth than Wall Street expected this quarter and plans to close about 150 USA cafes next fiscal year to boost performance, sending its shares down 2 percent after hours. It also said that it would return about $25 billion in cash to shareholders through buyback programs as well as dividend offerings - which was about a $10 billion increase from the previously announced target.
Johnson said Starbucks has not reached saturation point in the US, but it will be more strategic about where it puts new stores, focusing on underpenetrated markets in "Middle America". Additionally, it plans to cut general and administrative costs, and has hired a consultant to help in this area.