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Starbucks to own 100% of its China stores after buyout deal | |
(35 minutes later) | |
Starbucks is to take full ownership of all its China outlets, after agreeing to buying out its joint venture partner for $1.3bn (£994m). | Starbucks is to take full ownership of all its China outlets, after agreeing to buying out its joint venture partner for $1.3bn (£994m). |
The deal will see it acquire the 50% stake it does not already hold in 1,300 stores in Shanghai and the provinces of Jiangsu and Zhejiang. | |
Starbucks already fully owns the other 1,500 outlets in China - its fastest-growing market outside of the US. | Starbucks already fully owns the other 1,500 outlets in China - its fastest-growing market outside of the US. |
The coffee giant said the buyout was its biggest ever acquisition. | |
The announcement came as Seattle-based Starbucks announced net income fell 8.3% to $691.6m for the three months to July - only just matching market expectations. | The announcement came as Seattle-based Starbucks announced net income fell 8.3% to $691.6m for the three months to July - only just matching market expectations. |
The company also announced plans to close all 379 of its Teavana stores by the middle of next year because they had been "persistently underperforming". | The company also announced plans to close all 379 of its Teavana stores by the middle of next year because they had been "persistently underperforming". |
Starbucks bought the tea brand for $620m in 2012, and plans to continue carrying the products in its main Starbucks stores. | Starbucks bought the tea brand for $620m in 2012, and plans to continue carrying the products in its main Starbucks stores. |
Starbucks shares fell 5.5% to $56.24 in after-hours trading. | Starbucks shares fell 5.5% to $56.24 in after-hours trading. |
Chinese dreams | Chinese dreams |
The latest results are the first under new chief executive Kevin Johnson, who took over from co-founder Howard Schulz in December. | The latest results are the first under new chief executive Kevin Johnson, who took over from co-founder Howard Schulz in December. |
Mr Johnson described the China buyout as part of the firm's "long game" to deal with cooling growth in the US. | Mr Johnson described the China buyout as part of the firm's "long game" to deal with cooling growth in the US. |
The world's largest coffee chain is being affected by a reduced footfall in America's malls and high streets, as more consumers turn to shopping online or buying from meal kit sellers and convenience stores. | The world's largest coffee chain is being affected by a reduced footfall in America's malls and high streets, as more consumers turn to shopping online or buying from meal kit sellers and convenience stores. |
Same-store sales in the US rose by 5% last quarter. In China, there was 7% growth. | Same-store sales in the US rose by 5% last quarter. In China, there was 7% growth. |
License deal | License deal |
Starbucks already has a presence in 130 Chinese cities and hopes to expand its 2,800 stores to more than 5,000 outlets by 2021. | Starbucks already has a presence in 130 Chinese cities and hopes to expand its 2,800 stores to more than 5,000 outlets by 2021. |
There are nearly 600 stores in Shanghai alone, the largest number of any city globally. | There are nearly 600 stores in Shanghai alone, the largest number of any city globally. |
Meanwhile, Starbucks said it was offloading its 50% stake in all 410 outlets in Taiwan, meaning they will be fully owned by its joint venture partners. who pay the US firm license fees. | Meanwhile, Starbucks said it was offloading its 50% stake in all 410 outlets in Taiwan, meaning they will be fully owned by its joint venture partners. who pay the US firm license fees. |
The firm made a similar move with its Hong Kong and Macau operations in 2011. | The firm made a similar move with its Hong Kong and Macau operations in 2011. |