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03/28/2024 12:40:53 pm

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Starbucks Enthusiastic About Business Prospects in China Despite Sales Setbacks

Starbucks Enthusiastic About Business Prospects in China Despite Sales Setbacks

(Photo : Reuters) Starbucks Corporation remains upbeat about its business prospects in China despite slow first quarter earnings.

Despite the lukewarm economic growth in Asia, which has affected Starbucks Corporation's  latest quarterly sales, the coffee-chain remains enthusiastic about its business prospects in China and announced it would continue investing heavily in the mainland.

Starbucks Chief Executive Howard Schultz said on Thursday that despite signs of Beijing's slow economic growth, business in the country 'had never been stronger."

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Larger than the US

"We believe one day (China) could very well be larger than the US business," Schultz said.

Both the company and analysts said the slow sales in its latest quarterly earnings was not at all disappointing considering that Starbucks' return on investment (ROI) on its newly-established stores has strengthened.

Cowen & Co analyst Andrew Charles said the ROI was the more important indicator of a positive outlook for the company which, he said, stands to increase its growth prospects in China.

Five percent rise

Although financial analysts expected a 6.1 percent rise in its comparable sales in the Asia Pacific region, Starbucks reported a five percent rise in sales in its first quarter that ended December 27.

China is Starbucks' largest market outside the United States.

Investor expectations for Starbucks have reached a record high as Starbucks' sales recorded a double-digit percentage increase for almost two years.

Stock fell

Starbucks' high sales performance for two years have left it vulnerable to the slightest sign of trouble.

On Thursday, Starbucks' stock fell as much as five percent after the release of its first quarter earnings coupled with analysts' forecast that failed to meet market expectations.

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