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Starbucks' Teavana Shows Troubling Metrics

Starbucks' Teavana Shows Troubling Metrics
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Many retailers are seeing sales negatively impacted by declining mall traffic trends. On Friday, investors add another retailer to the growing list of those struggling in the current environment: Starbucks Corporation (NASDAQ: SBUX)'s chain of Teavana stores.

Speaking to CNBC on Friday morning, Starbucks' outgoing CEO and current executive chairman Howard Schultz said Teavana's poor performance was foreshadowed years ago.

Specifically, Schultz said a "seismic change" was identified years ago, foretelling mall traffic's fall. As a result, Starbucks' 350 retail Teavana locations in malls have been hurt, operating at losses and showing negative comps.

"Teavana is a company that is going to unfortunately suffer as a result of the consolidation of mall traffic and we are assessing that," Schultz added.

Schultz also cautioned the "seismic change" of traffic trends has accelerated as of late, but all is not doom-and-gloom. He noted there is still a "meaningful subset" of profitable stores, and the brand's iced tea beverages generated "significant levels of incrementality" to Starbucks locations.

Core Restaurants Are Doing Fine

Starbucks' core restaurants aren't showing the same signs of concerns as very few stores are inside malls, but those that are "continue to perform."

Meanwhile, the company plans on opening two thousand new stores globally and stores inside the United States are at their peak performance. This demonstrates how much white space is still available to continue opening new locations.

"Teavana unfortunately is going to be part of the mall problem but Starbucks is insulated from it and we continue to open many, many Starbucks stores around the world," he concluded.

At last check, shares of Starbucks were down 2.44 percent at $59.81.

Related Links:

A Decade Of Schultz: How Starbucks Has Fared Since He Retook The CEO Chair

Cut Starbucks Some Slack, Selling $10 Coffee Is A Good Business Strategy

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