(Reuters) – Starbucks Corp (SBUX) reiterated on Thursday that it is exploring strategic alliances for its China operations, following media reports that the company was considering selling a stake in the business to a local partner.
The Seattle-based company is facing declining demand for beverages in major markets such as the United States and China, and is looking to revamp its U.S. stores and gain a better understanding of its China operations, the company said in a new statement. CEO Brian Nicol told investors last month.
“All signs point to the competitive environment (in China) being extreme… and we need to figure out how to grow in the market… In the meantime, I We continue to explore strategic partnerships that have the potential to support our long-term growth,” he said on an October 31 earnings call.
Bloomberg reported Thursday that Starbucks is exploring options for its China operations, including a possible stake sale, and is gauging interest from potential investors, including domestic private equity firms.
In response to the report, Starbucks said in a statement that it is “working to find the best path to growth, including considering strategic partnerships.”
“We are committed to our business, our partners, and our growth in China,” he said, without providing further details.
Starbucks is grappling with a weak macroeconomic environment in its second-largest market, China, weak consumer spending and intense competition from local coffee chains such as Luckin Coffee.
Last year, Luckin became the first Chinese company to surpass its U.S. rival in the top spot in terms of annual sales.
Starbucks, which operates about 7,600 stores in China, has reported sales in the country have declined for three consecutive quarters, with a 14% decline in the last quarter.
The company last month suspended its outlook for next year as its CEO prepares a turnaround plan for the coffee giant.
(Reporting by Angela Christie, Brenda Goh and Kanjik Ghosh; Editing by Abhinaya Vijayaraghavan, Miyoung Kim and Jacqueline Wong)
