Palantir a high-risk investment with ’a one-of-a-kind growth and margin model’
Investing.com - Starbucks has received "a lot of interest" in the possible sale of a stake in its Chinese operations, the coffee chain’s CEO Brian Niccol told the Financial Times in an interview published on Wednesday.
The Seattle-based company has been pushing to reinvigorate sales in the country, its second-largest market behind the United States. Niccol said "people see the value of the Starbucks (NASDAQ:SBUX) brand," adding that "they’d love to be partnering up with us in figuring out" how to grow the firm’s presence in China from 8,000 to 20,000 stores.
Shares in Starbucks were little changed in premarket U.S. trading on Wednesday.
Buyout groups KKR & Co (NYSE:KKR), PAG, and Foutainvest Partners have previously expressed some interest in buying a stake in Starbucks’ Chinese business, Reuters reported in February, adding that, in a franchisee deal, Starbucks China would be valued at more than $1 billion. However, the size of the stake sale had not been determined.
Earlier this week, Starbucks announced that it would slash the prices of some of its iced beverages in China by an average of 5 yuan, or roughly $0.70, in a bid to ward off intensifying competition. This means that some drinks would cost as low as 23 yuan, Starbucks said in a post on the social media platform Weixin.
More "accessible" pricing was made available on a range of items, including non-coffee drinks and Starbucks’ Frappuccino offering, from Tuesday.
Starbucks has been aiming to attract price-conscious customers in China wary of tepid economic activity and an uncertain labor market picture.
Along with the entry of massive internet giants like Alibaba (NYSE:BABA) Group and JD.com into China’s food delivery industry, the company also faces pressure from domestic rivals like Luckin Coffee (OTC:LKNCY) and Cotti offering cheap prices for their drinks. However, Starbucks has stressed that it will not participate in a price war.
The firm did not slash its prices in China as a response to price competition, but to entice more customers to visit in the afternoon, Reuters has reported, citing a person close to Starbucks.
(Reuters contributed reporting.)