Starbucks Corp (SBUX.O) 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 is also putting the brakes on the rate of new store growth, closing about 150 under-performing company-operated stores, up from an average of 50 closures a year recently, and by slowing the number of new stores operated by third-party licensees.
The chain, which operates more than 8,000 USA stores, said the changes were made to address the weaker-than-expected sales growth, adding that several digital initiatives were expected to add 1% to 2% in comparable sales in fiscal 2019.
Meanwhile, sales are expected to grow just 1 percent in the next quarter.
Starbucks has not yet announced which stores will be closing.
The firm organized the session following the public outcry over two black men getting arrested for sitting at one of the tables without ordering a drink.
Starbucks said it now expects earnings in the range of $3.23 to $3.26 a share for the current fiscal year, down about a dime from its previous targets.
The company closed 8,000 cafes on May 29 so 175,000 employees could undergo racial tolerance training.
Starbucks CEO Kevin Johnson says the global coffee chain will be "leaning into" creating more plant-based beverages as consumers continue to demand vegan options. China is the company's biggest growth driver with same-store sales rising 4 percent in the last reported quarter.
Starbucks' Executive Chairman and co-founder Howard Schultz said earlier this month that he is stepping away from the company on June 26, ending an era.
"We have a line that we'd love to share with our customers later this year, so it is in our plans", she said.
In early May, Swiss-based Nestle said it would pay Starbucks $7.15 billion for exclusive rights to sell Starbucks coffees and teas.