Breakfast News: SBUX Assesses China Options
May 15, 2025
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Source: Image Created by Jester AI.
1. Starbucks Brews Over China Revamp
Starbucks (SBUX -0.04%) is in talks with potential investors regarding how to expand business in its second-largest market, China, reports Bloomberg. This includes the potential for a possible stake sale valued at several billion dollars.
- "We remain committed to China for the long term": CEO Brian Niccol cited great potential in China just a few weeks back on the latest earnings call, which could indicate more of a local partnership is being pursued rather than an outright sale.
- 7,750 stores with $740 million in quarterly revenue: Dividend Investor recommendation Starbucks has come under pressure in the key market due to local players including Luckin Coffee and Cotti Coffee taking market share. Luckin's revenue was almost $500 million more than Starbucks in the latest quarter.
2. Contrasting Outlooks for CoreWeave and Cisco
CoreWeave (CRWV -0.95%) issued its first earnings release since the March IPO after the market closed, with the stock down almost 8% despite beating revenue expectations due to an underwhelming outlook.
- Loss accelerates to $314.6 million from $129.2 million last year: CEO Mike Intrator warned of higher costs having a negative impact on near-term profit margins as the business is increasing investments, with quarterly losses expected to continue.
- Taking more than $600 million in AI-infrastructure orders: Hidden Gems rec Cisco (CSCO 5.69%) jumped over 3% after the closing bell thanks to the raise in full-year earnings outlook. This is being fueled by increased demand from cloud customers for AI-related networking equipment.
3. Key Earnings Today: AMAT, Globant, Deere
Applied Materials (AMAT 0.87%) is due to release Q1 earnings after the market closes. An update on China-related sales and any tariff impact will be monitored, alongside how AI-driven demand is holding up.
- 346 accounts exceeding $1 million in annual revenue: Globant (GLOB -1.42%) signaled a positive outlook last quarter, so investors will be keen to see if this materializes with the results released after the trading day finishes. Growth in large client accounts will be a key metric.
- Farm equipment industry in trade war fallout: Deere & Company (DE 2.22%) released earnings ahead of the market opening, with softer demand and tariff uncertainty meaning the business cut the lower end of its profit forecast.
4. Foot Locker Rips Higher on Acquisition News
Foot Locker (FL 85.00%) surged almost 70% ahead of the opening bell following news that Dick's Sporting Goods (DKS -15.65%) is in advanced talks to buy the company, with a deal announcement potentially coming today.
- 41% year-to-date fall in Foot Locker: The deal would allow Dick's to tap into the 2,400 stores of Foot Locker based in smaller locations around the world, differentiating from the 800 big-box stores it has mostly in U.S. suburbs.
- "Dick's would be inheriting a business that remains on the back foot": Neil Saunders, managing director at GlobalData, noted the turnaround plans for Foot Locker in recent years have been slow, making it far from a risk-free acquisition.
5. Next Up: Powell Speech and Data Deluge
U.S. Federal Reserve Chair Jerome Powell will speak today in his first public remarks since last week's policy meeting, giving his reaction to the lower-than-expected inflation print earlier this week.
- More inflation data to digest: The Producer Price Index (PPI) for April is expected to fall from 2.7% last month to 2.5%, providing further signs of easing inflation in the domestic economy.
- Mixed expectations for other releases: The consensus view for April Retail Sales data is for a 0% increase, a sharp drop from 1.5% growth last month. Initial Jobless Claims are expected to be at 229k, with no real change from the previous week.
6. Your Take
Walmart (WMT -0.47%) – reporting today – is up 135% over the last 5 years. Across the same period, the S&P 500 is up 106%.
Will Walmart be a market-beater over the next 5 years? Debate with friends and family, or become a member to hear what your fellow Fools are saying!
