Starbucks said it expects same-store sales to grow 1% in its third fiscal quarter of 2017. And Tesley Advisory Group downgraded the stock to "market perform", cutting its share price target from $70, among the Street's highest, to $60, "pending stabilization in Starbucks' volatile trends".
"While certain demand headwinds are transitory, and some of our cost increases are appropriate investments for the future, our recent performance does not reflect the potential of our exceptional brand and is not acceptable", Starbucks President and CEO Kevin Johnson said.
"The company's streamlining initiatives will enable greater agility in adapting more quickly to changes in consumer preferences, " the company stated. In the past year, Starbucks has opened nearly 1,000 new stores in the Americas, which includes the U.S., Canada and Latin America.
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.
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Earlier this month, Starbucks raised the price of its brewed coffee 10 cents to 20 cents at the majority of its company-owned stores stateside and company executive chairman Howard Schultz stepped down.
Johnson indicated that the store closings would be mostly in major metro areas, where wage expectations and other regulations make it hard to operate at a greater profit. Most of the new locations it opens will be in underserved markets.
Starbucks also highlighted a focus on teas, health-and-wellness options and "product innovation around core beverages".
The company also said it would look to cut general and administrative expenses with plans to partner with an external consultant to speed up the process.