Starbucks is exploring major moves to resurrect its struggling China business. The news Starbucks on Thursday said it’s exploring the “best path to growth” in the world’s second-largest economy, which includes “exploring strategic partnerships.” New CEO Brian Niccol also said words to that effect on the company’s fiscal fourth-quarter earnings call last month. The coffee giant’s statement was in response to a Bloomberg report that Starbucks is considering selling a stake in its China operations. According to Bloomberg, such options could spur investment from Chinese companies or private equity firms to help Starbucks navigate the domestic coffee market. Shares of Starbucks rose 1.5% following the news. Bloomberg also said that no decision has been made but came as major shareholder Elliott Investment Management pressured new Starbucks CEO Brian Niccol and his team to figure out a plan for China, the company’s No. 2 market behind the U.S. The Starbucks statement also said: “We are fully committed to our business and partners, and to growing in China. As we said on our Q4 earnings call , Brian is spending time [to] better understand our operations as well as the macro and competitive challenges in China.” On the company’s post-earnings call on Oct 30, which followed an ugly fiscal fourth-quarter preannouncement , Niccol added the U.S. was his near-term priority, “but our international business presents significant opportunities.” Big picture China has been a challenge for Starbucks, and other American companies for that matter, as Chinese consumer wallets have been stretched in a weak economy that has been slow to recover from the Covid pandemic. Same-store sales at Starbucks locations in China dropped 14% year over year. Starbucks also faces stiff competition from mass market competitors such as Luckin Coffee, a popular Chinese chain known for cheap prices. Bottom line Jim Cramer has repeatedly said that he believes Niccol is the right leader to turn around Starbucks not only internationally but here in the U.S., too. “Niccol is not fooling around. Everything is on the table” Jim said Thursday on “Squawk on the Street.” Jim added that the situation in China is “going to be solved very quickly.” “There’s a reason why Starbucks stock hasn’t gone down from when Niccol was picked,” Jim argued, touting Niccol’s successful six-years-plus leading Chipotle . Niccol started as Starbucks CEO in September, replacing Laxman Narasimhan who was ousted after just 17 months on the job. Narasimhan took over in March 2023 for three-time CEO Howard Schultz. (Jim Cramer’s Charitable Trust is long SBUX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
An employee services in a Starbucks coffee truck at Wuhan International Plaza on October 6, 2022 in Wuhan, Hubei province, China.
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Starbucks is exploring major moves to resurrect its struggling China business.
