Starbucks CEO Kevin Johnson said on Friday that the company's rivals are focusing on short-term gains, while Starbucks pursues a more sustainable growth plan.
Starbucks shares was down 1% Friday morning after the company reported second quarter results. While Starbucks' earnings hit estimates, sales fell slightly after Wall Street's expectations. The same store sales growth of 3% in China made estimates, but traffic to these sites fell again.
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 orders and pay to China by the end of the year.
"We not only drive transaction growth and engage new customers, but we also generate the return on invested capital that we believe is sustainable in order to continue building new stores at this rate for many, many years to come," Johnson says.
Johnson told analysts Thursday on the quarterly call that Starbucks wins in China because of its premium quality Although some investors may be worried about competition in China, we are still optimistic about SBUX's ability to maintain market share and believe the Alibaba relationship remains largely untapped growth opportunities, says analyst Andy Barish in Jefferies in a survey note.