Starbucks boss Kevin Johnson said Friday that the company's rivals are focusing on short-term gains, while Starbucks is pursuing a more sustainable growth plan.
Starbucks lost 1% Friday morning after reporting Q2 results. While Starbucks revenue exceeded estimates, sales were slightly below Wall Street expectations. In China, sales growth of 3% in China exceeded estimates, but traffic at these locations declined again.
Due to increased competition in China, Starbucks has increased the delivery of more than 2,100 branches in the country through a partnership with Alibaba. It has 8.6 million active loyalty program members and plans to add and pay for mobile orders by the end of the year.
"We are not only driving transaction growth and attracting new customers, but we are also generating a return on invested capital that we believe is sustainable to build new stores at this rate for many, many years," he said Johnson told analysts at the quarterly conference call Thursday that Starbucks is gaining in China for its premium quality
"While some investors may be worried about competition in China, we remain confident that SBUX can maintain market share and the view is that the Alibaba relationship still offers largely untapped growth opportunities, "said Andy Barish, analyst at Jefferies.