Teavana Shut Down, Victim of Mall Retail Struggles

Starbucks

Starbucks also said it would shutter all its Teavana stores.

As a result of its decision to close all of its Teavana stores, Starbucks said it incurred asset impairment and goodwill charges of approximately $100 million during the third quarter.

Starbucks announced this week it was closing all 379 of its Teavana locations over the coming year. The Seattle Tribune reports the 3,300 affected Teavana employees will be able to apply for positions at Starbucks stores. Its embrace of the digital revolution has made the coffee chain look nearly as much like a tech company as it does a food service company.

The Starbucks Coffee Co. says its closing all 379 of its Teavana locations, which includes the one at the Lehigh Valley Mall in Whitehall Township.

The company on Thursday reported profit that met Wall Street expectations in the first quarter under new CEO Kevin Johnson, but lowered its current-quarter earnings forecast.

The coffee giant acquired the US tea chain in 2012 for $620 million, when then-CEO Howard Schultz cited the expanding tea market as an appealing place for growth. But US mall culture is fading, partially because more people are foregoing trips to big retail hubs for the convenience of online shopping. Overall, our tea business has grown 40% since we launched Teavana in the USA five years ago, and it is up over 60% since launching in China and Japan roughly one year ago.

The company said its third quarter sales increased by 5 percent in the USA, 7 percent in China and 4 percent globally.

Meanwhile, executives at Starbucks are looking to China as a haven for long-term growth, a caffeine boost for business as American sales shows signs of cooling.

Starbucks shares fell $1.25 to $58.25 in extended trading. Starbucks will continue to sell Teavana drinks in its Starbucks stores as well as bottled Teavana drinks in grocery stores.

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