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Starbucks CEO calls Chinese rivals' use of discounts unsustainable



Starbucks CEO Kevin Johnson said Friday that the company's rivals are focusing on short-term gains, while Starbucks is pursuing a more sustainable growth plan.

9 as part of its goal to hit 6,000 Chinese stores by fiscal 2022. Meanwhile, the Chinese startup has opened 2,370 locations in the 18 months since the company was established and plans to open 2,500 this year.

Starbucks shares were down 1% Friday morning after the company reported second-quarter results. While Starbucks' earnings estimates, sales fell slightly short of Wall Street's expectations. Same-store sales growth of 3% in China estimates, but traffic to those locations once again declined

With the increased competition in China, Starbucks has added delivery to more than 2,100 stores in the country through a partnership with Alibaba. It has 8.6 million active loyalty program members and plans to add mobile order and pay to China by the end of the year.

"We are not only driving the transaction growth and engaging new customers, but we are also generating the return on invested capital that we believe is sustainable to continue to build new stores at this rate for many, many years to come, "Johnson said.

Johnson customs analysts Thursday on the quarterly conference call that Starbucks wins in China because of its premium quality .

"While some investors may be concerned about competition in China, we remain optimistic about SBUX's ability to maintain market share and think the Alibaba relationship remains largely untapped growth opportunity," Jefferies analyst Andy Barish said in a research note. 19659010]
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