Starbucks posted its worst day of trading in nearly one year on Wednesday, hours after the coffeehouse chain said it would close dozens of stores and provided a weak sales forecast.
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The Seattle-based company said Tuesday it would close 150 underperforming stores in “densely penetrated markets” and slow its rate of store growth. Starbucks traditionally closes about 50 underperforming locations annually.
Starbucks said it expects same-store sales to grow 1% in its third fiscal quarter of 2017. Analysts had expected same-store sales to grow 3% in that period.
Starbucks’ stock closed down more than 9% on Wednesday, marking the company’s largest single-day percentage decline since July 2017. The company was the worst performer on both the S&P 500 and the Nasdaq 100. The $52.22 price per share is a new 52-week closing low.
“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 CEO and President Kevin Johnson said in a statement. “We must move faster to address the more rapidly changing preferences and needs of our customers.”
The chain, which operates more than 8,000 U.S. 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.
Johnson has also been dealing with a P.R. crisis after the controversial arrests of two African-American men at a Philadelphia Starbucks in April. Following the incident, Johnson promptly announced plans to close 8,000 company-owned stores for a portion of the day on May 29 for anti-bias training.
After the training, which he also took, Johnson told FOX Business his stores should be “A place that’s not your home and not your work, but a place that’s a warm, welcoming environment and a sense of belonging for all.”
The latest round of financial changes came weeks after Starbucks Executive Chairman Howard Schultz announced he would leave the role in June. Schultz is widely rumored to have political aspirations.
On a positive note, Starbucks said it will return an additional $25 billion more to shareholders than initially planned in the form of share buybacks and dividends. The company will hike its dividend 20% to 36 cents per share.
This story, originally published on 6-19-18, has been updated.