Starbucks Brews Up Retail Buzz After Report Of Coffee Chain Exploring Options For China Business

According to Bloomberg News, the coffee chain has contacted potential investors and partners.

Starbucks (SBUX) has contacted private equity and technology firms as it considers options for its China business, Bloomberg News reported early Thursday, prompting reactions from Stocktwits users.

The coffee chain has struggled to reignite growth amid intense competition from rival cafes worldwide and a pullback in consumer discretionary spending.

It now also faces pressure from U.S. tariffs, which will, among other things, increase the costs of coffee bean imports.

Starbucks has been speaking to advisers about ways to grow its operations in China, including the potential introduction of a local partner, Bloomberg News reported, citing people familiar with the matter.

According to the report, a potential stake sale could attract interest from Chinese conglomerates or other local companies. The plan was at an evaluation stage.

Prospective bidders are expected to submit initial feedback in the next few weeks.

Starbucks has faced a challenge in China from emerging chains like Luckin Coffee (LKNCY) and Cotti Coffee. Last quarter, the American company generated $740 million in net revenue from its more than 7,750 stores in the country, according to the Bloomberg report.

Starbucks has not commented on the reported evaluation of its China business. At an analyst call last month, CEO Brian Niccol said he saw "great potential" in the country and was "committed to China for the long term."

This development comes as hundreds of Starbucks baristas staged strikes against the company's new dress code in the U.S.

On Stocktwits, retail sentiment was 'neutral', unchanged from the previous day.

Several users reposted news about the China business evaluation, with one saying that the move suggests that there is "fear" and that CEO Niccol seems "desperate."

In recent years, McDonald's (MCD) and Yum! Brands (YUM), the parent of KFC, sold stakes in their China operations to PE firms to tap growth and better cater to local tastes.

Starbucks shares are down 5.2% year to date.

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