Starbucks Shares Slip As First-Quarter Results Show Slowdown In China
Starbucks shares fell about 4 percent after the close of regular trading on Thursday after the company reported fiscal first-quarter results.
In China, sales growth at the company's stores that have been open at least a year showed a slowdown, adding to recent concerns about the health of that country’s economy.
China has been an important area of investment for Starbucks in recent years because more people have been drinking specialty coffees as the country's middle class has grown. But in the most recent quarter, same-store sales in China and the Asia Pacific region grew 5 percent, less than the 9 percent growth the company experienced in the Americas.
Still, chief executive Howard Schultz said he just got back from a trip to China and that he’s taking the long-view about investing there.
"Because despite now having close to 2,000 stores in nearly 100 cities in China and being on track to have 3,400 stores on the mainland by 2019, I’m convinced more than ever that Starbucks is just getting started in that important country," Schultz told analysts and investors on a conference call.
The stock market has taken a hit this year largely because of worries about the Chinese economy. Schultz said we shouldn’t get so worked up about what he calls short-term gyrations.
He said he’s convinced the Chinese government is serious about economic reform and that China’s middle class will continue to expand. Schultz said there’s more room for Starbucks to grow there as it rolls out its loyalty program and introduces an app for ordering and paying with a smart phone.