Starbucks Reopening Its Shanghai Stores in Lockdown Rebound

(Bloomberg) -- Starbucks Corp. said it’s reopening its stores in Shanghai after a wave of Covid-19 infections and government lockdowns hurt its business in the key Chinese market.

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The Seattle-based company has reopened 600 of its 940 stores in the city, a spokeswoman said by email. Starbucks is moving quickly to restart business there on just the third day of Shanghai’s official reopening. Most Starbucks locations are offering mobile ordering only, but the company said it’s working to begin in-store dining soon.

Starbucks shares were up 0.1% in New York trading at 10:34 a.m. The stock had dropped 32% this year through Thursday’s close, compared with a 12% decline for the S&P 500 Index.

The reopening comes not a moment too soon for Starbucks, with analysts projecting its same-store sales in China to plummet 23% in the fiscal year ending in early fall, according to estimates compiled by Bloomberg.

Starbucks has called China one of its two key growth markets, along with the US, and the virus has severely hurt sales in that market with on-and-off government restrictions for more than two years. The company has about 5,600 stores in the country overall.

With Howard Schultz at the company’s helm again, China is among the question marks in investors’ minds. Last quarter, same-store sales in the nation tumbled 23%, missing analysts’ estimates. Schultz, who became CEO again in April, is also dealing with growing unionization efforts in the US.

“Clearly a lot of people are unhappy,” said BTIG LLC analyst Peter Saleh, referencing the company’s stock decline so far for 2022. But reopening China should help drive more value in the shares, he said.

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“China is one big piece, and getting some more clarity around unionization is one big piece,” he said. “Aside from that, I don’t think there’s much really broken with the company.”

(Updates with additional details starting in fourth paragraph. An earlier version corrected the extent of the reopening.)