While Starbucks can’t shield itself from the outcomes of the U.S.-China trade war, the company can continue to play “the long game” when it comes to China, Starbucks CEO Kevin Johnson told CNBC on Monday.
“We haven’t seen any significant impacts from the geopolitical situation between the U.S. and China, but that said, we’re not immune,” he told CNBC’s Jim Cramer on “Mad Money.” “But because we really have built Starbucks in China for China, it really is operating as an entity in China that’s relevant to the consumer, to the culture, and we’re playing the long game.”
China has been a focal point for Starbucks as the coffeemaker’s second-largest market after the United States. In August, Starbucks announced a partnership with Alibaba Group, China’s largest technology company, to boost its digital and physical presence in the People’s Republic.
In early November, just after Starbucks reported better-than-expected earnings and revenues for its fiscal fourth quarter, Johnson told CNBC’s Eunice Yoon that management would start applying lessons it learned from the Chinese market to its U.S. business. In that interview, Johnson stated his intention to play “the long game” in China.
“We operate in 78 countries around the world and so we deal with geopolitical situations all the time,” Johnson told Cramer on Monday. “I think by engaging with an attitude of optimism and ‘How can we collaborate to create a better environment for all,’ we can find great paths forward.”
The CEO added that there’s “still more to do” to push Starbucks’ business back into growth mode, reiterating a point made on the company’s fourth-quarter conference call.
But with a multi-billion-dollar partnership with Nestle to sell Starbucks’ products outside its official locations on the books and several “business-simplification” initiatives in progress, Johnson said he sees a bright outlook ahead of his company.
“The Global Coffee Alliance with Nestle is something that is just now kicking in and I think that’s going to pay dividends for years and years to come for Starbucks and for Nestle,” he said, adding that Starbucks’ “aggressive” share buyback was a message to Wall Street that its “growth-at-scale agenda” is going to work.
“Much of this buying back our stock is the acknowledgment that we think we’ve got one of the world’s most admired and trusted brands, and we’ve got the right strategy to really drive the growth agenda here over the next several years,” the CEO said.
Starbucks’ stock slid 1.01 percent amid marketwide weakness on Monday, settling at $67.91 a share. The stock hit an all-time high of $68.98 after Starbucks’ latest earnings report on Nov. 1.
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