Starbucks to shutter Teavana stores

After five years of struggle, the mall retail chain is cut loose from the coffee company.
Teavana

At some point on Thursday night, Teavana’s Twitter account posted a stylized video featuring its Summer Lemonade product, showing its ingredients on a colourful background while upbeat music punched out a sunny beat. It is captioned “When life gives you lemons, make lemonade iced tea. Obvs.”

The brand may be giving that advice to itself; Starbucks, the coffee giant that owns Teavana, announced Thursday it is closing all 379 of Teavana’s retail locations – including all 54 of its Canadian locations.

The company says Canadian closures will be completed by September, while most of the remaining closures are expected to come by Spring 2018.

Teavana products, however, will still be available in Starbucks locations. A statement from the brand says Teavana “offers a compelling, strategic priority of the company and continues to meet our expectations since our acquisition of Teavana five years ago. Teavana has evolved into a powerful brand in Starbucks stores and we expect the same as we grow distribution through grocery and mass merchants as well.”

According to Starbucks, Teavana products have generated US$1.6 billion in sales revenue from Starbucks locations globally.

Starbucks acquired the retailer in 2012 for approximately US$620 million, encouraged by tea’s QSR takeout potential and Teavana’s significant in-mall footprint. Shopping malls in the U.S., however, have been in sharp decline since the 2008 financial crisis (Canadian malls are faring somewhat better, but are by no means at their peak.)

Starbucks had been renovating the look of many Teavana locations. But in its latest financial statement, Teavana’s business group (which also includes the Seattle’s Best Coffee and Starbucks Reserve Roastery banners) saw quarterly revenues decline by 9% compared to the same period last year and operating losses increase more than 600% “due to the goodwill and asset impairment charges as a result of our strategy to focus on Teavana tea within Starbucks stores,” the company said.

This is not the first time Starbucks tried to diversify through acquisition only to be left with a withering retail operation. It acquired La Boulange, a bakery line, in 2012 as well. It closed all of its 23 retail shops three years later.

Overall, Starbucks’ latest quarterly financial report showed consolidated net global revenues of US$5.7 billion – an 8% increase from Q3 2016