Starbucks 2015 Annual Report Download - page 38

China/Asia Pacific
Fiscal Year Ended
Sep 28,
2014
Sep 29,
2013
Sep 28,
2014
Sep 29,
2013
As a % of CAP Total
Net Revenues
Net revenues:
Company-operated stores $ 859.4 $ 671.7 76.1 % 73.2 %
Licensed stores 270.2 245.3 23.9 26.8
Total net revenues 1,129.6 917.0 100.0 100.0
Cost of sales including occupancy costs 547.4 449.5 48.5 49.0
Store operating expenses 221.1 170.0 19.6 18.5
Other operating expenses 48.0 46.1 4.2 5.0
Depreciation and amortization expenses 46.1 33.8 4.1 3.7
General and administrative expenses 58.5 48.4 5.2 5.3
Total operating expenses 921.1 747.8 81.5 81.5
Income from equity investees 164.0 152.0 14.5 16.6
Operating income $ 372.5 $ 321.2 33.0% 35.0%
Store operating expenses as a percentage of company-
operated store revenues 25.7 % 25.3 %
Revenues
China/Asia Pacific total net revenues for fiscal 2014 increased $213 million, or 23%, primarily due to increased revenues from
company-operated stores (contributing $188 million). This increase was primarily driven by the opening of 250 net new
company-operated stores over the past 12 months (approximately $154 million) and a 7% increase in comparable store sales
(approximately $44 million), mainly attributable to a 6% increase in the number of transactions.
Licensed store revenues contributed $25 million to the increase in total net revenues, mainly due to higher royalty revenues
from and product sales to licensees, as a result of 492 net new licensed store openings over the past 12 months and an increase
in comparable store sales.
Operating Expenses
Cost of sales including occupancy costs as a percentage of total net revenues decreased 50 basis points, primarily due to sales
leverage (approximately 40 basis points).
Store operating expenses as a percentage of total net revenues increased 110 basis points, or 40 basis points as a percentage of
company-operated store revenues, over the prior year period, as a result of company-operated store growth outpacing licensed
store growth.
Other operating expenses as a percentage of total net revenues decreased 80 basis points. Excluding the impact of company-
operated store revenues, other operating expenses decreased 100 basis points, largely due to cost management (approximately
60 basis points) and sales leverage (approximately 40 basis points).
Income from equity investees increased $12 million, primarily driven by improved performance from our joint venture
operations in China, South Korea and Japan. This increase was partially offset by unfavorable foreign currency fluctuations,
driven by the weakening of the Japanese yen against the U.S. dollar and lapping a reduction to the estimated asset retirement
obligations of our store leases in the region in fiscal 2013. These fluctuations, paired with the accelerated growth in segment
revenues resulting from the shift in the composition of the store portfolio to more company-operated stores, resulted in income
from equity investees declining 210 basis points as a percentage of total net revenues.
The combination of these changes resulted in an overall decline in operating margin of 200 basis points over fiscal 2013.
34 Starbucks Corporation 2015 Form 10-K