Teavana

Judge bars Starbucks from closing 77 failing Teavana stores

An Indiana judge has taken an unusual step and temporarily barred Starbucks from closing 77 failing Teavana stores in Simon Property Group malls because the real estate giant was less able to handle the financial pain. Starbucks said in July it planned to shutter its 379-store Teavana operation — but Simon rushed to court to block 77 stores in its malls from going dark — claiming such a move by a high-profile tenant could spark other stores in its malls to close. Starbucks, after trying to turn around its stumbling tea chain, said last August it was pulling the plug on Teavana. It wanted to close all the stores by the end of the year. But Indianapolis-based Simon, in an environment where hundreds of stores across the country are closing, rushed to a local court to ask Judge Heather Welch to stop the store closing. Welch, in a 55-page order, found that the very profitable Starbucks could absorb the financial hit — estimated by Starbucks to be $15 million over five months — better than Simon could. The mall operator did not provide an estimate of how much the closings of the Teavana stores would hurt them. The case is being closely watched by retailers and landlords alike amid a retail meltdown that has resulted in a record number of bankruptcies this year. The retail failures have left landlords scrambling to find new tenants and retailers in the difficult position of breaking their leases. Still, it is rare that a judge orders a retailer to keep stores open, retail experts said. “I’m somewhat shocked by the ruling,” said real estate lawyer Joshua Stein. Welch “catalogues every possible detriment to Simon as a result of having vacant space,” Stein said, adding, “That’s part of a job description of owning real estate. You deal with it and don’t get injunctions to have your tenant continuing to operate.” Other industry experts, who did not want to be identified, said the ruling will send a chill down the spines of distressed retailers. “If you are a tenant that has to close a bunch of stores that are based in malls,” said one source, “you are pretty scared after this ruling.” Welch admitted that “no court has ever entered preliminary or permanent injunctive relief to specifically enforce a continuous operations covenant against a non-anchor tenant” — but she did so anyway. “We are disappointed in the judge’s ruling and will continue to focus on finding a resolution,” Starbucks, which has a market cap of $81 billion, said in a statement, noting that it is not clear whether it will appeal — or even if it is permitted to do so. Simon’s vacancy rate as of Sept. 30 was 4.7 percent — slightly below the 4.8 percent national vacancy rate for all malls, according to JLL data. Simon argues that if Starbucks is allowed to “prematurely” break its lease, it could be forced to fill the vacancies with “less creditworthy tenant(s)” or less desirable tenants “who will only agree to less desirable lease terms, and/or a shorter-term lease,” according to the court filings. Industry sources suggested that other mall operators may now challenge Starbucks’ plans to close Teavana stores in their shopping centers. Shares of Simon Property Group, a $52 billion company, gained 60 cents on Friday, to $162.35.

United States of America · 30 Nov 2017

Starbucks to close down all Teavana locations, impacting 3,300 jobs

Starbucks (SBUX) announced on Thursday that all 379 Teavana stores -- which are primarily based in malls across the country -- have been "underperforming." The move will impact 3,300 workers. "The company concluded that despite efforts to reverse the trend through creative merchandising and new store designs, the underperformance was likely to continue," Starbucks said in a press release. Most locations will shut down by Spring 2018, Starbucks said, and people employed at Teavana locations will be invited to apply for jobs at Starbucks locations in order to preserve their jobs. The coffee giant first announced plans to purchase the struggling tea retailer Teavana in 2012 for $620 million. Teavana's announcement is the latest in a wave of store closings inside American malls. Retailers from JCPenney (JCP) to GameStop (GME) have announced plans to shut down brick-and-mortar locations as they struggle to keep pace with e-commerce sites. There were 5,300 store closing announcements in the first six months of the year, triple the number during the same period last year, according to an analysis by Fung Global Retail & Technology. Between 20% and 25% of American malls will close within five years, Credit Suisse said in a report released last month. Despite the Teavana closures, Starbucks again said it's expanding rapidly, with plans to add 240,000 jobs globally over the next five years. However, most of that growth is taking place overseas, particularly in China. Starbucks said earlier on Thursday that it plans to make another major investment in China. Currently, Starbucks shops are popping up at a rate of one-per-day. CNNMoney (New York) First published July 27, 2017: 5:09 PM ET

United States of America · 27 Jul 2017

Teavana up 50% on Starbucks acquisition

Starbucks (SBUX) agreed to acquire Teavana (TEA) for $620 million in an all-cash deal. Teavana shareholders will receive $15.50 per share in cash once the deal goes through. Starbucks said that it plans to grow Teavana's brand by expanding into more neighborhoods. Teavana, which was founded in 1997, sells more than 100 kinds of loose-leaf teas in its 200 primarily mall-based locations throughout the U.S. and Mexico, The two companies recently partnered to open a store in the Middle East, a concept they're looking to replicate in other countries, where tea is consumed, in the years ahead. Related: Eyeing huge markets, Starbucks opens first India store The acquisition is another example of Starbucks making inroads into the burgeoning tea industry, which the company says is a $40 billion global market. Starbucks got rid of the word "coffee" from its logo last year. In June, it announced a tea-only store in Seattle under the Tazo brand. Starbucks bought Tazo for $8.1 million in 1999. Today, it is a $1.4 billion brand that's sold in grocery stores and at Starbucks locations. The tea market isn't the only area in which Starbucks is putting down roots. Earlier this year, the company bought bakery brand Bay Bread for $100 million and the Evolution Fresh juice brand for $30 million. The company has also teamed up with Green Mountain Coffee Roasters (GMCR) to market Starbucks-branded K-Cups and began selling the Verismo, its own single-serve machine. Teavana shares shot up in the afternoon and trading was halted until the announcement was made. It ended the day up 52.5% at $15.45 a share. Starbucks shares fell nearly 3%.

United States of America · 12 Nov 2012