Starbucks weighs strategic partnerships for China operations

Starbucks reiterated on Thursday it is exploring strategic partnerships for its Chinese operations, after a media report saying the company is considering selling a stake in the business to a local partner.

The Seattle-based company, facing a decline in demand for its beverages in major markets such as the U.S. and China, aims to revamp its U.S. stores and gain a better understanding of its Chinese operations, the firm's new CEO Brian Niccol told investors last month.



"All indications show me the competitive environment is extreme (in China)... and we need to figure out how we grow in the market... in the meantime, we continue to explore strategic partnerships that could help us grow in the long term," he said on an earnings call on Oct. 31.

Bloomberg reported on Thursday that Starbucks was exploring options for its Chinese operations including the possibility of selling a stake in the business, and it has gauged interest from prospective investors including domestic private equity firms.

Responding to the report, Starbucks said in a statement it was "working to find the best path to growth, which includes exploring strategic partnerships."


"We are fully committed to our business and partners, and to growing in China," it said, without elaborating.

In China, its second-largest market, Starbucks has grappled with weak consumer spending and stiff competition from local coffee chains such as Luckin Coffee in a sluggish macroeconomic environment.

Last year, Luckin pipped its U.S. rival to the top spot on annual sales for the first time in the China market.

Starbucks, which operates nearly 7,600 stores in China, has reported declining sales in the country for three consecutive quarters, with a 14% fall in the last quarter.

The company suspended its forecast for the next fiscal year last month, as its CEO prepares a turnaround plan for the coffee giant.