Just recently, the shares of popular coffee chain Starbucks Corp (SBUX:NASDAQ GS) have steadily increased, as the company revealed their plans to open 500 new locations in China each year for the next five years. As of 11:34 AM EST, SBUX is trading up 2.16% to $59.07.
In an interview with Howard Schultz, chief executive of The Wall Street Journal, he said, “We have confidence in the future of the Chinese economy, despite all the rhetoric, noise and issues. People are looking for reasons not to believe. I’m on the ground and I see firsthand. I am bullish.”
Schultz is also expecting China to become the largest market of Starbucks, despite the turbulent and slowing economy of the country. At this time, there are already 2,000 Starbucks stores operating in 100 Chinese cities, and according to Reuters, the chain expects to create 10,000 jobs annually in the country through 2019 to realize their plans.
Jim Cramer of TheStreet and of the Action Alerts Plus charitable trust gave his opinion on the Starbucks expansion stating, “Howard Schultz is showing a commitment to China with these 500 stores a year that shows the business is exploding over there and it is amazing. Obviously the wage increases in China are giving a boost to those who drink triple vente caps like I do! That’s still one more reason why we own this terrific stock for actionalertsplus.com.” Separately, TheStreet Ratings objectively rated the company’s stocks according to risk-adjusted total return prospect over a 1-year investment horizon, and not based on the news in any given day, which means that the rating may differ from Cramer’s view.
Considering that 500 new locations will be opened every year, along with the creation of thousands of new jobs, the growing coffee trend in the country will definitely be boosted.
The Wall Street Journal added that this move by Starbucks came as they continued to grow in China, while sales for other food companies, such as Yum! Brands (YUM) (which owns the Pizza Hut and KFC chains), have slowed down. Currently, Starbucks ranks at a #4 (Sell) on the Zacks Rank.