Why Starbucks Is Doubling Down in China
Starbucks Corporation (NASDAQ: SBUX) got pummeled last month after issuing a disappointing earnings report. The company missed revenue estimates and lowered its guidance for the second time this fiscal year as management adapts to slower traffic growth. Shares plunged 9.2% in the following session, its sharpest drop in two years. But the report may not have been the biggest news of the day out of the coffee giant.
Earlier in the afternoon, it said it would buy the remaining half of its East China joint venture, spending $1.3 billion to take it over. As a result, Starbucks is taking full control of 1,300 stores in three Chinese provinces. The company also reaffirmed its goal of opening 5,000 stores in Mainland China. In a related decision, Starbucks sold its half of its Taiwan joint venture for $175 million.
Image source: Starbucks.
Source: Fool.com
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