Starbucks decided to close all its Teavana stores as the business was struggling, the latest revenue reports falling short of Wall Street expectations. The decision comes with one of the biggest risks ever taken by the company as Starbucks is set on purchasing all Teavana stores in China, an significant and risky investment that shows they are extremely sure on their core coffee business.
The Death of the American Mall Dragged Teavana In Its Grave
The majority of Teavana stores are currently located in malls, a business that is slowly dying, increasingly more Americans preferring to shop online. As such, the latest third-quarter results fell well below Wall Street prospects for both comparable sales and revenue. However, Teavana did manage to meet Wall Street earning expectations.
In total, 379 stores will be closed. As for the 3,300 Teavana employees that will be affected by the decision, Starbucks is offering them the opportunity to apply for a position at their coffee shops, but the jobs are not yet guaranteed.
Starbucks Will Spend $1.3 Billion to Acquisition Joint Businesses in the Chinese Market
On Thursday, the company issues a release, confirming that it is planning to spend up to $1.3 billion to become the sole owner of all joint Teavana locations in China. This transaction will mark the largest purchase in the history of the company and will bring 1,300 stores under the Starbucks franchise.
At the moment, Starbucks owns 2,800 stores in China, 1500 of which being under full ownership. Apart from the 1,300 which are to be purchased in the near future, the company plans to open an additional 2,200. Their ultimate goal is to have 5,000 stores on the Chinese market by 2021.
The decision comes after Starbucks registered impressive earnings in China. All Chinese stores recorded 6-7% growth during latest quarters, as opposed to the American market where earnings grew by only 3%.
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