Shares of Starbucks were falling 9% in morning trading on Friday.
All 379 Teavana locations will be closed over the next year.
"We felt it was an appropriate time to take the decision and begin shutting down those stores", he said.
"With (loyalty) growth continuing to slow, we fear USA same store sales are unlikely to maintain the mid-single digit range that the market has come to expect", Credit Suisse analysts said in a report.
The announcement came as Starbucks said global sales rose four per cent at established locations for the quarter ended July 2, fueled by higher average spending per visit. Starbucks says that, despite its efforts to drive traffic through creative merchandising and new store designs, it's not optimistic that the troubling trend will reverse itself. 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 Annapolis, Maryland-based tea retailer had operated at the mall at University Parkway and Interstate 75 for just under a year before it filed for Chapter 11 bankruptcy.
Teavana has also had little success competing with Argo Tea for the last few years.
Teavana products are now sold in Starbucks locations, but it is unclear whether that would continue with Teavana stores closing. It opened its first of five Teavana tea bars in 2013. With the change, Starbucks is deciding to put their focus back to their original brand - pricey coffee beverages.
When Starbucks acquired Teavana in 2012, it seemed like a ideal marriage for the king of coffee chains to apply their successful model to the already successful Teavana brand. Most locations will be shuttered by spring 2018. In January, Starbucks said it planned to convert its three New York City Teavana locations into Starbucks stores. Total revenue was $5.66 billion, less than the $5.76 billion expected. By 2020, it's predicted to blast through the roof to $47 billion.
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