Starbucks Considering Sale of Majority Stake in Japan Business
Starbucks is reportedly exploring the sale of a majority stake in its Japanese operations, potentially valued at $3 billion. This move aligns with broader strategic shifts seen earlier this year when Starbucks entered into a joint venture for its China business by ceding 60% ownership to Boyu Capital. The Japan market represents one of Starbucks' largest international markets outside the U.S., and selling it would reduce capital intensity in mature markets, allowing more focus on core operations in the United States. The company has made progress in its turnaround strategy, with recent Q3 results showing global comparable sales growth of 7.9% and adjusted earnings per share (EPS) exceeding estimates by about 30%. Starbucks raised full-year EPS guidance following these positive results. CEO Brian Niccol emphasized that operational improvements are beginning to impact throughput positively. A valuation model suggests a target price for SBUX stock at $118, implying an upside of approximately 21.8% from the current share price over two years. The potential sale in Japan is expected to contribute to margin improvement by removing lower-margin operations from consolidated results.
Topics: capital allocation Japan market sale portfolio restructuring Starbucks