Starbucks China's net revenue grew 54% to $1,186.4m in Q2

It is driven by incremental revenues from the impact of the ownership change in East China.

Starbucks CEO and president Kevin Johnson said, “Starbucks Q2 of fiscal 2018 represented another quarter of record financial results, highlighted by accelerating momentum across our Americas business - particularly in the U.S., continued strong performance in China and our strongest comp growth in Japan in five quarters.”

Starbucks CFO Scott Maw added, “We have a clear set of actions underway to improve profitability through a combination of comp and beverage growth and savings across COGS, waste and labor as we move through the back half of the year. We are continuing to invest in our business - strategically and with a ‘long game’ mentality - whilst at the same time taking decisive near-term action to maximise our brand portfolio and ensure that we continue to deliver outsized returns to our shareholders in the quarters and years ahead."

Net revenues for the China/Asia Pacific segment grew 54% over Q2 FY17 to $1,186.4 million in Q2 FY18, primarily driven by incremental revenues from the impact of the ownership change in East China, incremental revenues from 759 net new store openings over the past 12 months, favorable foreign currency translation, and a 3% increase in comparable store sales.

The increase was partially offset by the absence of company-operated store revenue related to the sale of the brand's Singapore retail operations to a licensed partner in Q4 FY17.

Q2 FY18 operating income of $204.6 million grew 16% over Q2 FY17 operating income of $175.9 million. Operating margin declined 570 basis points to 17.2%, primarily due to the impact of the ownership change in East China.

The company reiterates the following full year FY18 targets but notes that all guidance items exclude the yet to be determined impact of its previously announced plan to close more than 8,000 company-owned stores in the U.S. on May 29, 2018 to conduct racial-bias training for all partners (employees) in the US.

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