Starbucks’ Biggest Stock Decline

Published on: 28 Jul, 2017

In almost 2 years, Starbucks Corporation (NASDAQ: SBUX) experienced their biggest stock decline after cutting their forecast. Shares fell 8.2% to $54.63 in New York marking it the biggest plunge since August 2015. Starbucks also struggled to run a chain of tea shops wanting to close their Teavana stores which would eliminate 3,300 jobs and was forced to cut their profit forecast for the fiscal year.

The company wants to target growth in China as a key market and they hope to do so by buying out its East China joint venture for $1.3 billion which would be the biggest deal in the company’s history. This will allow Starbucks to take full control of 1,300 cafes in China where coffee and tea culture is becoming a huge market. The company currently operates about 2,800 locations in China and plans to increase to 5,000 by 2021.

Starbucks also aims to improve their digital app as well as selling more food. Stepping back from their tea business is also a plan where they intend to close down all 379 Teavana stores by next spring. When Starbucks bought Teavana in 2012 for $620 million, profit growth did not see any results in mall locations. Starbucks now sells Teavana branded products in their cafes which generates abut $1.6 billion a year in sales.

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Ariana Cheong

Email: ariana@financialinsiders.com

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