Starbucks (SBUX) shares jumped higher Thursday as traders reacted to a series of comments from the coffee chain's investor day in New York that included plans for rapid growth in China.
Starbucks said it plans to expand its store footprint in the world's second-largest economy by 6,000 stores over the next four years, nearly double it current total, and will open a so-called "virtual" store that utilizes both its own app and those of online e-commerce giant Alibaba Group Holding (BABA) ., a tie-up CEO Kevin Johnson once described as "rocket fuel" for the group's growth strategy. Starbucks also said it will partner with Uber Eats to offer delivery service in the U.S. from around a quarter of its existing company-operated stores.
We are expanding our delivery capabilities in China, equipping 2,000 stores in 30 cities to bring Starbucks right to their doors. Excited to be partnering with Alibaba! $SBUX pic.twitter.com/789adgNlhO— Starbucks News (@Starbucksnews) December 13, 2018
Starbucks shares closed up 1.18% higher at $66.91, a move that extends its three-month gain to around 21.8% and values the Seattle, Wash.-based coffee chain at just over $83 billion.
Starbucks said last month that its stronger-than-expected fourth quarter sales were in part down to a delivery deal with struck with Alibaba earlier this year.
Comparable China sales, Starbucks said, rose 1% from last year, move that took global same store sales 3% higher. Comparable U.S. sales rose by a much better-than-expected 4%, the best in five years, as it closed under-performing stores and shifted its menu to focus more on lunchtime options.
"Accelerating growth in our two targeted long-term growth markets of China and the U.S. acknowledges that these two markets are in very different stages of development," Johnson told investors on a conference call. "When we look at the strategic priority of accelerating growth in China, our second largest and fastest growing market, a key metric is total transaction growth, which includes new store expansion as well as same store comp."
"We've now successfully unified Mainland China as a company operated market which has positioned us for long-term expansion," he told investors in November.
Starbucks also guided for full year 2019 adjusted earnings of between $2.61 and $2.66 per share, but noted that global comparable sales growth could come in at the lower end of current guidance of between 3% and 5%.
John Cluver, who heads the group's retail operations in Asia, said the Alibaba partnership, which includes not only delivery but digital sales on its various online platforms, would we "rocket fuel for our holistic digital flywheel strategy in China.