Food & Beverage

Starbucks CEO on coronavirus: We won't hesitate to close more stores in China if needed

Key Points
  • Starbucks CEO Kevin Johnson sought to tamp down concerns about how the coronavirus outbreak in China would impact the coffee chain's business there.
  • "We realize that this is a temporary issue that we've got to deal with," Johnson told CNBC.
  • "When there's a concern, we will close stores," he said.
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Starbucks CEO Kevin Johnson on deciding to temporarily close half the chain's stores in China

Starbucks CEO Kevin Johnson sought to tamp down concerns on Wednesday about how the coronavirus outbreak in China would impact the coffee chain's business there.

"We've been in China for 20 years. We realize that this is a temporary issue that we've got to deal with," Johnson said on "Squawk on the Street." "We're doing it responsibly. We're doing it by prioritizing the health and well-being of our Starbucks partners."

Starbucks has closed more than half of its Chinese locations as the country battles the spread of the virus.

Johnson called it a "very dynamic situation," stressing that "when there's a concern, we will close stores."

"We're dealing with this on a daily basis," he added.

Shares of Starbucks were trading down more than 2.5% early Wednesday, a day after the Seattle-based company beat expectations with fiscal first-quarter earnings but cautioned that the Wuhan coronavirus could alter its fiscal 2020 outlook.

Johnson said Wednesday the company had planned to raise its guidance.

But due to the spread of the virus, he said, "We felt it was in the best interest to really better understand the implications of that. And as we do we're going to be transparent with our investors."

The total number of confirmed cases of the coronavirus reached more than 6,100 worldwide, with 132 deaths in China, Chinese and international health authorities said Wednesday.

China accounted for 10% of Starbucks' $7.1 billion revenue during its first quarter.

Sales at Chinese locations open at least a year increased by 3% as Starbucks faces greater competition in the country, most notably from rival Luckin Coffee. The Xiamen, China-based rival recently overtook Starbucks as the largest coffee chain in the country, based on the number of stores.

Even with the ongoing situation around the coronavirus, Johnson said he remained bullish on Starbucks' prospects in China. "I am still so optimistic about the long-term growth potential that China presents. We will navigate this."

"And guess what? Next year we're going to get to comp over this," he added. "This does not change our outlook for our long-term double-digit growth at scale earnings model."

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Watch CNBC's full interview with Starbucks CEO Kevin Johnson

— CNBC's Amelia Lucas contributed to this report.