Starbucks to take control of their Japanese operations

Earlier on this year the American coffee giant Starbucks reported a staggering 18^th consecutive quarter of a 5% plus increase in same-store sales as well as a near quarter (23% to be exact) rise in earnings.

Now after those incredible figures, the Seattle-based chain is growing once against.

Starbucks is planning on taking full ownership of their Japanese operations in a $900 million deal that will see the company fully oversee their own future in their second largest market.

Shares in Starbucks Coffee Japan were up 4.5% on the JASDAQ when the market opened up this morning.

Initially founded in the mid-1990s as a joint venture, Starbucks Japan has grown at a rapid rate since their inception. Now the venture has over 1,000 which employees in the region of 25,000 people.

At the moment 60.5% of Starbucks Coffee Japan is owned by public shareholders and by Starbucks’ Japanese partner Sazaby League.

The American entity will buy both out: Sazaby League for roughly $505 million whilst the publicly owned shares will fetch around $410 million.

In a statement initially published on the company’s investor website, Howard Schultz, Starbucks’ chairman, said: “Nearly twenty years ago we opened the first Starbucks store outside of North America in Tokyo’s Ginza district….Japan is a market we know well and care deeply about.”

The deal, the company admit, is aimed at further monetising one of their major markets and could launch their tea chain Teavana on the back of this move.

Currently Asia as a whole represents 6% sales and 10% of the company’s operating profit last year, though the current financial year has been mired in uncertainty because the government have increased sales tax to 8% and are considering hiking it up to 10%.

Schultz also noted that “Full ownership of Starbucks Japan enables us to build on the amazing foundation of customer trust and loyalty our partners have achieved by continuing to take care of our people, delivering the highest quality coffee and innovating in product, store design and the digital experience.”

photo: wikicommons