It’s not tea time for enough people for Starbucks’ (SBUX) taste.
The coffee chain announced on Thursday that it was closing all 379 of its Teavana stores, saying that the mall-based chain’s “underperformance was likely to continue.” Starbucks, which will continue to sell Teavana tea at its namesake stores, bought the chain for $620 million in 2012, hoping it could have the same success with loose-leaf, exotic teas as it had, and continues to have, with coffee. Moreover, tea has been a key plank in its efforts to build up its presence in China. But Starbucks, which indicated this spring it was looking into options for the Teavana business, noted declining foot traffic at malls.
Starbucks is grappling with an intense battle for U.S. market share, with everyone from meal kit sellers to rivals like McDonald’s (MCD) and Dunkin’ Donuts (DNKN) pressuring its business.
“The combination of trends in the quarter and ongoing macro pressures impacting the retail and restaurant sectors has us a bit more cautious,” Starbucks Chief Financial Officer Scott Maw said in a statement.
Despite the pressure, Starbucks fared well at home: sales rose 5% at established locations, also driven mostly by higher spending. Still, there was no growth in customer visits, a potential precursor to troubles ahead. Globally, same-store sales rose 4% for the quarter ended July 2. In Asia, they rose 1%.
Earlier on Thursday, Starbucks said it was buying out its partners in a East China joint venture for $1.3 billion deal, its largest ever.
For the second quarter, Starbucks Corp. earned $691.6 million, or 47 cents per share. Excluding one-time items, it earned 55 cents per share, in line with Wall Street expectations. Total revenue was $5.66 billion, less than the $5.76 billion expected.
Teavana is not the first Starbucks acquisition to go bust: two years ago, Starbucks closed all 23 La Boulange bakery cafes, plus the two manufacturing facilities that serve these locations. Starbucks said the 3,300 Teavana store employees will have the chance to apply for jobs at a Starbucks store.