Investors in global coffee chain Starbucks Corporation (NASDAQ:SBUX) have finally seen the company’s share price snap back in recent months following earlier commotion surrounding the company’s growth plans in China.
Specifically, investors became concerned earlier this year when Starbucks’ management team indicated the company would be expecting year-over-year same store sales growth in Asia’s largest economy of nil, compared to 7% same store sales growth in the previous year.
Certainly a disheartening number, concerns have abounded for some time now that the market for high priced coffee in China may simply not be as "hot" as first advertised, and a cultural shift toward artisanal espresso products may be further down the road for Starbucks.
The reality remains that Starbucks has contended it intends to open hundreds of new coffee shops in China and more than 2,000 globally next year – a very impressive number.
New growth via store openings will drive the company’s success in the short-term, however it appears investors are already looking a few years out at just how successful existing stores will be before placing a bet on Starbucks and their bid to become a global powerhouse in coffee.
Ultimately, I believe the long-term strategy of Starbucks’ management team will pay off and we are currently in the early innings of a global phenomenon. Time will tell, but I would encourage investors to take a look at Starbucks at current levels – it may not be this cheap for very long.
Invest wisely, my friends.
