Starbucks strikes largest acquisition in its history with China deal

Starbucks strikes largest acquisition in its history with China deal

While Starbucks has invested in new store designs and updated merchandising, Maw said that the rate of decline at mall-based Teavana stores over the last six months has been worse than forecast, and that the company expects further declines.

Starbucks Corp. will be closing all 379 of its Teavana retail units over the coming year, the company said Thursday.

East China is a significant and strategic region for the company, with Shanghai alone accounting for almost 600 stores, the largest number of stores globally of any city where Starbucks has a presence, the USA company said.

The company said it's also divesting a 50% stake in its Taiwanese joint venture for about $175 million.

"Our partnership with Starbucks remains strong, and both parties are satisfied with the outcome", Lo said, adding that the deal has been in discussion for a few years.

Shares of Starbucks, which is scheduled to report third-quarter earnings on Thursday after the bell, were up marginally in premarket trading.

Net income fell to $691.6 million (47 cents per share), down from $754.1 million (51 cents per share) in the prior year quarter.

The company reaffirms its commitment to operating 5K stores in Mainland China by 2021 after firing off the M&A. "We are confident that our new ownership model and continued collaboration with Starbucks will enable us to be even more focused on delivering an elevated Starbucks Experience to our customers in the Taiwan market".

This is the third quarter in a row that Starbucks has posted weaker-than-expected same-store sales.

The announcement came as Starbucks said global sales rose 4 percent at established locations for the quarter ended July 2, fueled by higher average spending per visit. Starbucks Rewards membership increased 8 percent year-over-year to 13.3 million active members. "Nonetheless, despite posting record performance in Q3 and further extending our lead compared to the industry overall, the combination of trends in the quarter and ongoing macro pressures impacting the retail and restaurant sectors has us a bit more cautious going into Q4". Business from the Rewards program represented 36 percent of US company-operated sales and mobile payment grew to 30 percent of transactions.

Related:

Comments


Other news