In line with its strategy to fortify global presence, Starbucks Corporation SBUX has announced the opening of its first express retail location, Starbucks Now, in Beijing. Notably, Starbucks Now has mobile-order-and-pay and delivery service.
Leo Tsoi, Starbucks China’s retail president as well as the chief operating officer said that “The Starbucks Now store is a testament to our unwavering commitment to delivering innovative customer experiences through new retail formats. This new retail format and design approach provides us with a platform to offer customers a fast and convenient retail experience to suit their on-the-go lifestyle.”
China: A Major Growth Driver
The China Asia Pacific or CAP has now become the fastest growing segment. In the second quarter, China registered 3% comps growth. Management believes that China and the Asia-Pacific region will lead to much more meaningful business over the next five years supported by rapid unit growth, growing brand awareness, and increased usage of the digital/mobile/loyalty platforms.
To drive growth in China, the company has announced a historic partnership with Alibaba for providing seamless Starbucks Experience. Starbucks began delivery services in Beijing and Shanghai via Alibaba's Ele.me platform. In China, the Starbucks Delivers program has been expanded to more than 2,100 stores across 35 cities. By the end of 2019, the company expects to expand Starbucks Delivers to 3,000 stores across 50 cities in China.
Starbucks' business in China is rapidly growing due to innovative store designs, local product innovations and the success of the MSR program. Over the next five years, the company has plans to build 600 net new stores annually in Mainland China, which will double the market's store count from the end of fiscal 2017 to 6,000 across 230 cities. This speedy expansion in China is likely to triple its revenues and double its operating profit by the end of fiscal 2022 from fiscal 2017.
In the past six months, shares of this Zacks Rank #2 (Buy) company have gained 40.8%, outperforming the industry’s 23.5% rally.
Other Key Picks
A few other top-ranked stocks that warrant a look in the same space include Chipotle Mexican Grill, Inc. CMG, Papa John's International, Inc. PZZA and Denny's Corporation DENN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chipotle Mexican Grill and Papa John's has an impressive long-term earnings growth rate of 19.2% and 12.5%, respectively.
Shares of Denny's have gained 26.3% in the past three months.
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Starbucks Corporation (SBUX) : Free Stock Analysis Report
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