Starbucks Justifies Its Plans To Acquire Starbucks Japan During Conference Call

During

fourth quarter conference call on October 30, Howard Schultz, Starbucks' founder and Chief Executive Officer further explained the reasoning behind the company's increased presence in Japan. In September, Starbucks entered into an agreement to acquire the remaining shares in Starbucks Japan it already did not own for $914 million. Schultz expects the purchase to be EPS accretive in the first year and better positions the company to increase the pace of new store openings as part of a multi-year investment. Schultz said that its acquisition will provide $1 billion in incremental revenue, which will help boost the company's annual global revenue over $19 billion. Starbucks expects to see 16 percent to 18 percent revenue growth during fiscal 2015. Excluding the Japan impact, revenue growth is expected to be consistent with the company's previous target of 10% plus revenue growth. “We remain very confident in the decision to acquire all of Japan, given the immediate accretion of this transaction on a non-GAAP basis, low funding, cost leveraging, offshore cash, significant growth opportunities in our stores and other channels, and an overall high IRR, reflecting strong yield economics,” Schultz said during the conference call.