NEW YORK—Starbucks plans to shutter all its Teavana stores as it seeks to improve sales at its namesake coffee stores.

The company said Thursday it will close all 379 Teavana locations over the coming year. It had acquired the mall-based chain in late 2012, with then-CEO Howard Schultz noting the huge potential for the tea market. Then this past April, the company said it was reviewing its options for the struggling chain. On Thursday, Starbucks CEO Kevin Johnson noted declining foot traffic at malls.

“We felt it was an appropriate time to take the decision and begin shutting down those stores,” he said.

According to Teavana’s website, there are 16 Teavana locations in the GTA, including stores in high-profile locations such as the Eaton Centre and Vaughan Mills.

The announcement came as Starbucks said global sales rose 4 per cent at established locations for the quarter ended July 2, fuelled by higher average spending per visit. But the frequency of customer visits was flat from a year ago.

In the U.S., sales rose 5 per cent at established locations, also driven mostly by higher spending. The Seattle-based company cited “ongoing macro pressures impacting the retail and restaurant sectors” that have made it more cautious going into the next quarter.

Competition in the U.S. restaurant industry has intensified, and Dunkin’ Donuts said earlier in the day that customer traffic fell again at its established U.S. locations. McDonald’s, meanwhile, has been promoting $1 sodas and $2 McCafé drinks in the U.S., a strategy the burger chain says helped bring in customers during the second quarter.

Johnson said that promotion didn’t affect Starbucks, because the “value players” are competing in a different segment.

In its Asia unit, Starbucks’ sales rose just 1 per cent at established locations during the three-month period. Starbucks has announced plans to acquire the remaining 50-per-cent stake of its East China joint venture that it does not already own, making it the operator of all Starbucks stores in mainland China.

For the quarter, Starbucks Corp. earned $691.6 million (U.S.), 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.

Starbucks shares fell $1.25 to $58.25 in extended trading.

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