About time. Their high priced, bitter coffee ain't gonna save them no more.Starbucks can’t catch a break. The coffee retailer says it will close 600 stores, about 8.5% of its 7,100 total stores, an expansion of the 100-store closing target it had previously announced.
The Seattle coffee chain has been feeling the pinch of a tightening economy. In February, the company fired 600 employees with another 600 to be laid off by March.
Starbucks says it is trying to cull unprofitable stores from the franchise and expects to book $200 million of asset write-offs in the third quarter related to the closings. Starbucks shares are down 40% over the past year.
In April, when Starbucks warned that profits for the first quarter would be 6 cents below the 21-cents-per-share Wall Street target, Schultz said the turnaround plan wasn’t taking hold.
“The current economic environment is the weakest in our company’s history, marked by lower home values, and rising costs for energy, food and other products that are directly impacting our customers,” Schultz said at the time. Schultz returned as CEO in January, replacing Jim Donald. As a story by Fortune’s David Stires pointed out, Schultz is trying to undo the exuberant expansion effort of his predecessor Donald who wanted to triple the number of stores to 40,000 with half in the U.S. and the rest abroad.