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Starbucks (SBUX) Plans to Shut Down E-Commerce Operations

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After announcing the shutdown of 379 stand-alone Teavana stores last month, Starbucks Corporation (SBUX - Free Report) plans to close its online operations on Oct 1.

Although there was no announcement from the company, a representative confirmed the same to Business Insider. Starbucks’ website currently offers discounts on various products as part of a liquidation sale till the beginning of October.

The online store offers products like glasses, mugs, coffee brewers, and espresso makers along with coffee, tea and beverage syrups. The products are still available through third-party sellers like Amazon.com, Inc. (AMZN - Free Report) and Starbucks’ other grocery partners. Meanwhile, the company will keep its online customers updated on product availability.

Notably, Starbucks has been planning on partnerships with digital companies to expand its brand and global retail footprint to reach more customers. The company also plans to further integrate digital and mobile transaction to its business model as mobile payments constitute 30% of Starbucks orders in the United States.

Soft consumer spending and growing popularity of online shopping require the company to strengthen its digital capabilities.

However, due to the challenging macroeconomic environment in the U.S. restaurant space, Starbucks, along with many of its peers like Chipotle Mexican Grill, Inc. (CMG - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) has been facing a difficult sales environment.--

Over the past few months, the U.S. restaurants are witnessing a shift in consumer demand, which has adversely affected the sales performance of the company. Moreover witnessing its fiscal third quarter as well as the initial fourth quarter, Starbucks now is somewhat bearish for the remainder of fiscal 2017. This has partially resulted in a downward revision of the Zacks Consensus Estimate for the company’s earnings. Over the past 60 days, current quarter and year earnings estimates have declined 6.8% and 2.4%, respectively.

Additionally, the company’s shares have massively underperformed the industry year to date. The stock has lost 2.5%, as against the 6.3% gain of the industry.



Nevertheless, Starbucks is introducing many technological innovations to strengthen its brand. These new digital initiatives are expected to enhance service, convenience and customer loyalty for this Zacks Rank #4 (Sell) company.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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