Starbucks to close 250 stores this week

Starbucks ( SBUX ) plans to close more unprofitable locations as its turnaround under CEO Brian Niccol continues.

In a letter posted to Starbucks' blog and sent to employees on Thursday, COO Mike Grams shared plans to close 250 stores in the US and Canada this week, reducing its store count by roughly 1%.

"We have carefully reviewed our North America coffeehouse portfolio and identified locations where we do not believe we can consistently deliver the experience we want for customers and partners or where we don't see a path to acceptable financial performance," Grams wrote to staff.

Almost exactly a year ago, the company made the same move to reduce its locations by 1%. Starbucks had 18,371 locations in North America last quarter, compared to 18,734 stores a year ago.

While Starbucks closes some stores, it's remodeling others. On Wednesday, the company announced plans to accelerate coffeehouse redesigns that bring back chairs and a cozier vibe to cafés. Starbucks said it will complete at least 1,500 "uplifts" by the end of fiscal year 2026 and ramp up further in fiscal 2027.

The company also said it plans to open a technology hub in India next year.

The news followed a strong third quarter, indicating that Niccol's turnaround plan was making progress.

Starbucks posted same-store sales growth of 7.9%, more than the 5.7% growth Wall Street expected, according to Bloomberg data, and above the 6.2% jump seen in Q2. Last year, the company saw a 2% decline in overall same-store sales growth in the third quarter.

William Blair analyst Sharon Zackfia said the store closures could be "modestly beneficial" to same-store sales growth and maintained her Outperform rating on the shares.

Starbucks stock is up 10% over the past year, underperforming the S&P 500's ( ^GSPC ) 15% gain.

Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @ BrookeDiPalma or email her at bdipalma@yahoofinance.com.