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Starbucks looks for China caffeine hit Starbucks reports record annual profit
(about 7 hours later)
Starbucks boss Howard Schultz has said expansion in China will secure its future for "decades to come". Starbucks may be complaining of "global headwinds" but that did not stop the world's biggest coffee chain from reporting record annual profits.
While Starbucks still makes most of its profit in the US, Mr Schultz said its Chinese stores were the most efficient and lucrative. It made an operating income of almost $4.2bn (£3.4bn) for the year to 2 October, up 16% on the previous year.
It comes as the world's largest coffee shop chain said it posted its "most profitable quarter - capping off the most profitable year". That was mainly down to a strong showing for its biggest market, the Americas, where net sales rose 11%.
Operating profit rose 16% to $4.2bn (£3.4bn) for the year. However, in the fourth quarter of its financial year, global sales at existing stores rose by only 4%.
That was lower than the 4.9% rise analysts had expected.
The fastest growth was in the China and Asia Pacific region, which recorded growth of 23% for the year.
Starbucks boss Howard Schultz said its Chinese stores were the most efficient and lucrative.
While Starbucks still makes most of its profit in the US, Mr Schultz has said expansion in China will secure its future for "decades to come".
Last month, Starbucks announced plans to more than double its stores in China to 5,000 by 2021.Last month, Starbucks announced plans to more than double its stores in China to 5,000 by 2021.
In the fourth quarter, Starbucks' profit in China and Asia Pacific increased 48% to $192m, helped by the opening of nearly 100 new stores. Mr Schultz said the company was facing "ongoing economic, consumer and geopolitical headwinds".
However, globally, sales at existing stores rose by only 4% in the quarter, which was lower than the 4.9% rise analysts had expected. Mr Schultz, who has been warning of a "seismic shift in consumer traffic" for years, said the popularity of online shopping was keeping people at home and away from main shopping streets or malls.
The company said a change in consumer behaviour was partly to blame for the slow down. In Europe, the Middle East and Africa, sales dropped by 1% during the fourth quarter, while in China and Asia Pacific, sales were up by 1%.
In what Mr Schultz described as a "seismic shift in consumer traffic", the popularity of online shopping was keeping people at home and away from main streets or malls. Starbucks operates 25,085 stores in 75 countries worldwide, with 690 new ones having opened in the last quarter.
In Europe, the Middle East and Africa, sales in fact dropped by 1% while in China and Asia Pacific, they were up by the same percentage point.
The company said it operates 25,085 stores in 75 countries worldwide with 690 new ones opened in the last quarter.