uploads///CAP Same Store Sales Growth

How Starbucks’ CAP Segment Is Gaining Momentum


Nov. 12 2015, Updated 11:05 a.m. ET

CAP segment

About 13% of Starbucks’ (SBUX) revenue and 11% of its operating income comes from its CAP (China–Asia-Pacific) segment, making it the company’s second-most-important segment. Revenue from the CAP segment grew to $652 million from $309 million in 4Q14. This 110% growth was a result of the Japan segment acquisition, which Starbucks completed at the beginning of 2015. Excluding the impact of the Japan segment, revenues for the CAP segment grew 18%.

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Same-store sales growth

  • The CAP segment’s same-store sales growth for 4Q15 was 6%, which grew from 5% in the corresponding quarter in 2015.
  • Driving this same-store sales growth was traffic, which stood at 6% in 4Q15.
  • Ticket growth was flat in 4Q15.
  • The CAP segment’s growth was mainly driven by growth in traffic from China, but the company noted that all the regions contributed to an increase in traffic growth.
  • This is positive because it shows strength in China—especially when the recent stock market slump and fears over a slowing economy have plagued investor sentiment.

Currently, Starbucks forms about 3% of the Consumer Discretionary Select Sector SPDR (XLY). XLY also invests about 3% of its portfolio in McDonald’s (MCD), 1% in Chipotle (CMG), and 0.3% in Darden (DRI).

Other segment

  • Starbucks’ EMEA segment’s same-store sales grew 5%, flat from 4Q14.
  • The traffic grew 3% and the ticket, or average check, grew 2%.

CAP segment potential

The CAP segment, which includes China, has strong potential for Starbucks, and the company is just getting started. The company operates only 1,800 restaurants in China. Store additions have accelerated ahead of the company’s estimated 1,500 stores by the end of 2015. This shows how confident management is about the future for this region, which may become one of the largest contributors to Starbucks’ revenue.


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