Starbucks really opened the eyes of Wall Street investors Tuesday, and it wasn’t because of one of the company’s caffeinated drinks.
In a quarterly guidance call with investors, Starbucks CEO Kevin Johnson said his company expects same-store sales to rise just 1 percent globally for the current quarter. That’s not only the worst quarterly growth for the company in almost nine years, it was far short of the 3 percent growth analysts were expecting.
Hence, the company’s stock took a hit Wednesday, falling more than 9 percent, the worst single-day drop in nearly a year.
Starbucks closes about 50 stores a year on an annual basis, so closing 150 is a significant increase. And although the company hasn’t said which specific stores it will shutter, most of the affected stores will be in major metro areas “where increases in wage and occupancy and other regulatory requirements” are making them unprofitable, Johnson said.
That’s corporate-speak for regulated increases in minimum wages and other government regulations.