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Executives

JoAnn DeGrande -

Troy Alstead - Chief Financial Officer, Principal Accounting Officer and Chief Administrative Officer

Analysts

Sara H. Senatore - Sanford C. Bernstein & Co., LLC., Research Division

Keith Siegner - Crédit Suisse AG, Research Division

John S. Glass - Morgan Stanley, Research Division

Andrew M. Barish - Jefferies & Company, Inc., Research Division

Jonathan R. Komp - Robert W. Baird & Co. Incorporated, Research Division

Sharon Zackfia - William Blair & Company L.L.C., Research Division

Matthew J. DiFrisco - Lazard Capital Markets LLC, Research Division

Mitchell J. Speiser - Buckingham Research Group, Inc.

Michael Kelter - Goldman Sachs Group Inc., Research Division

Jason West - Deutsche Bank AG, Research Division

Starbucks Corporation (SBUX) Overview of New Reporting Segments Call January 13, 2012 1:00 PM ET

Operator

Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Starbucks Conference Call to provide a brief overview of the company's new reporting segments. [Operator Instructions] Thank you. Ms. DeGrande, you may begin your conference.

JoAnn DeGrande

Thanks, Rob. Good morning for those of you here in the West Coast, and good afternoon to most of the rest of you. Thanks for joining us today. This is JoAnn DeGrande, Director of Investor Relations at Starbucks Coffee Company. Also with me today is Troy Alstead, our CFO.

Previously, we informed you that we would be providing financial results for our new reporting segments, which were effective at the beginning of fiscal 2012. Yesterday, we filed an 8-K with those financial statements, and we're hosting this call today to provide some additional background information, as well as to give you an opportunity to ask questions to help you model these new segments.

Our discussion today will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements and risk factor discussions in our filings with the SEC and including in our and last annual report on Form 10-K. Starbucks assumes no obligation to update any of these forward-looking statements or information.

This conference call is being webcast, and an archive of the webcast will be available on our website at starbucks.com under Investor Relations. Our call will be approximately 30 minutes. [Operator Instructions]

Before I turn the call over to Troy, let me remind you that we will release Q1 fiscal 2012 results on January 26. So today's conference call will only address financial results through fiscal year end 2011, and we will not comment on the just ended 2012 fiscal first quarter. This conference call is intended to discuss the historical information other our new segment reporting only.

With that, let me turn the call over to Troy. Troy?

Troy Alstead

Thanks, JoAnn, and good afternoon to many of you. Good morning to others. In July, we announced a new leadership structure that will enable us to accelerate our global growth strategy, highlighted by a new 3-region organizational structure for our retail business. Those 3 regions include the Americas; Europe, Middle East, Africa; and China, Asia Pacific.

Today, I'm going to spend a few minutes walking you through each region to provide additional color on historical performance of each. I'll also take you to a change to our G&A reporting, which includes shifting certain indirect costs from their inclusion in business segment results to unallocated corporate expenses.

As JoAnn mentioned, we have reserved time on the call for questions as I know you're all working to update your models prior to our first quarter earnings call. Let me also reiterate that the intent of today's call is to level set you on historical performance under the new segment structure, so I'll not comment on current quarter results or guidance until the January 26 earnings call.

The first reporting segment I would like to discuss, and our largest segment, is the Americas. Comprised of the U.S., Canada and Latin America, the Americas made up 77% of Starbucks consolidated revenue and 78% of operating income, excluding the operating loss from other in fiscal 2011. This is an extremely healthy business, with operating margin of just over 20% in FY '11. While the U.S. contributes nearly 90% of the Americas revenue, we're targeting growth across this entire segment. Canada remains our largest market outside of the U.S. And we have bold ambitions for Brazil, Mexico and Argentina to name a few others. Cliff Burrows, who has led the U.S. segment to record results, has expanded his role as president of this new region.

Our second largest reporting segment in terms of revenue is EMEA, which includes Europe, the Middle East, Russia and Africa. Contributing 9% of Starbucks revenue but just over 2% of operating income, excluding the operating loss from other, EMEA is clearly a large opportunity for us. One clear benefit to the organizational realignment is that it allows us for the first time to put a dedicated president in place to lead the region with a focus solely on EMEA. The appointment of Michelle Gass to this position is ideal. Michelle has a wide breadth of experience during her 15 years at Starbucks, including leading global strategy, marketing and category management and Seattle's Best Coffee. Importantly, Michelle also played an integral role in the development and execution of Starbucks' transformation agenda, which was the strategic basis of our U.S. business turnaround that began in 2008. Michelle will bring the experience she gained through that successful turnaround to a region that is currently underperforming but that has significant potential.

We have previously stated that our long-term margin target for the EMEA region is in the mid-teens, with modest improvement from current mid-single digits margins targeted for FY '12. To get there, Michelle and team will be focused on driving top line growth while carefully manage expenses throughout the P&L. The cost of doing business in EMEA is greater than any other region and managing such diverse countries, both geographically and socially, is an extremely complex undertaking. Nevertheless, we are confident in our ability to gain leverage on our fixed costs including occupancy, depreciation and G&A.

Additionally, we're confident in our ability to share recent best practices and successful programs from other markets to help drive top line growth in this region. This includes the introduction last week of the My Starbucks Rewards loyalty program in the U.K., which has been a powerful contributor to the U.S. business over the past 2 years.

While I've noted opportunities for improvement in EMEA, I also want to convey the excitement I have for this important region going forward. We're enthusiastic about our prospects in the U.K. as 2012 will bring exciting opportunities to this market, including the London Olympics in July. Germany and France have been solid contributors. And our recent purchase of the remaining equity in our highly successful Swiss business provides us a successful road map toward profitability in Western Europe. It also adds further scale to our existing equity footprint in the U.K., Germany and France, so we have the opportunity to drive more cost leverage.

Additionally, we have very strong license partnerships all across EMEA including in Spain, Russia and the Middle East to name a few. With Michelle's leadership and a renewed focus on this important region, we're confident in what lies ahead for EMEA.

China and Asia Pacific, or CAP, is our third retail reporting segment and comprises 5% of Starbucks consolidated revenue. It is our fastest-growing segment, with revenues increasing 36% in fiscal 2011. Operating margin is very strong at 35%, contributing 8% of Starbucks operating income, excluding the operating loss from other. Fueled by the recent strength in China, Japan, Korea and others, CAP is a key focus area for our future growth. We have already disclosed that we plan to open up approximately 300 net new stores in this region in fiscal 2012, representing a unit growth rate of more than 10%. Demand for Starbucks has never been higher in this part of the world, and we're just scratching the surface.

Now it is very important to understand the role that ownership mix plays with respect to the strong margins in this region. As our company operated presence expands as a portion of our business, we'll naturally see some margin compression due solely to business mix as we shift moderately away from that license and JV income over time, particularly given our company operated growth strategy in China. We target margin improvement on a market-by-market basis. But as a whole, due to a higher mix of company-operated stores, CAP margins will moderate to an extremely healthy 30% or so in 2012.

We're excited that John Culver, who led our former International business the past 2 years, will now be solely focused on this fast-growing and important region. He will also lead the integration of the India market into the portfolio later this year.

One other change I'd like to highlight for you today is around the reporting of certain indirect overhead costs. In conjunction with the move to the new 3-region structure, we have changed the accountability for and reporting of certain back-office expense allocations. These allocations include certain indirect merchandising; manufacturing costs; and back-office shared service costs such as marketing, store development, partner resources and facilities. These expenses were previously allocated to segment level costs of sales in operating expenses. As these expenses will now be managed at a corporate level, they will be reported within unallocated corporate expenses.

The change in management of these expenses reflects our growing operations as the focus of these support teams has become much more global in nature and straddles the business as a whole rather than on a specific business unit. As a result, the recent financials reflect a $113 million increase to G&A for fiscal 2011, directly offset by reductions in COGS including occupancy, store operating expenses and other operating expenses. The only changes to our 2 other reporting segments, CPG and other, were due to the reclassification of the certain G&A expenses I just noted.

I hope this brief overview has given you additional context on our new reporting segments. Looking ahead, this new reporting structure should provide you with greater visibility into our business and the ability to more closely track with our progress as we continue executing on our blueprint for growth.

With that, I'd now like to open the call up to Q&A. Again, please restrict your questions to only that, that was covered in today's call. Rob?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Matthew DiFrisco from Lazard.

Matthew J. DiFrisco - Lazard Capital Markets LLC, Research Division

Can you just confirm cost of sales, including overseas store operating expenses? When you look at the regional data, those dollar amounts, are they only 100% associated with company-operated stores? For instance, in EMEA, they would not have any participation with license stores or affiliation with that. And the cost of sales, including occupancy, would that -- how would -- does that also have CPG included in that in foodservice and other?

Troy Alstead

Matt, on your last question first, no, there is no CPG whatsoever in the 3 regions. So just to be clear, when we look at the Americas and when you look at EMEA, even though we have CPG foodservice business in those operations, there's no CPG there. So I do want to be clear about that. The -- on your first question, the answer is that there are cost of sales associated with some of our license businesses. So to the extent that we have -- we sell product to a licensee, for example, we'll incur -- generate a revenue associated with that sale to the licensee, and we'll have an associated cost of goods associated with that licensee. So yes, these full P&Ls do reflect some costs throughout. Now things like store operating expresses, if a licensee is operating, no, there will not be any associated store operating expense. But particularly in cost of sales and perhaps a few other lines to a lesser degree, you will see some costs associated with that business.

Operator

Your next question comes from the line of Michael Kelter from Goldman Sachs.

Michael Kelter - Goldman Sachs Group Inc., Research Division

I was hoping for a little more granularity on the other segment because $635 million in absolute is now 35%, 40% of entire company EBIT. So as opposed to just what changed versus before, maybe you could just take a broad look and say, of the $635 million, here is some of the big buckets and here's what's in there because I don't feel like I understand exactly what's in there.

Troy Alstead

Michael, well, first of all, conceptually, what's in -- just be clear, what's in our other segment is a mixed bag of things. But it includes our sales as coffee business, which is too small separately to be reported out, but that's in there. At this point in time, that business to give you directions, some thoughts on it as I've spoken about in the past, in recent couple of years, has operated at a loss as we have been reinvesting in building that business, building a structure against it, relaunching the brand, for example, rechanging the SKU lineup down the aisle. A lot of re-launch happening in that. So that business has been operating according to our expectation, and that has meant a loss in the last couple of years. And that's reflected in that other segment. It also includes our Digital Ventures business. That's very, very small. But what we do online will -- and the associate revenues and costs associated with that shows up there. That businesses profitable but again, it's tiny. So it doesn't move the needle very meaningfully. Beginning in fiscal '12, it's not something you see in the historical financials here. But initially, some of our Evolution Fresh business will roll up into this other segment. Again, it's not in the numbers you see historically. But to understand, that's what will go there now, until and if at some point in time that business becomes meaningful enough to either be captured in other segments or qualify for its own. And then -- but most meaningfully, unallocated G&A sits in that bucket. So that's where you see really the corporate G&A that's in that other segment, and that's in there. So again, not -- I think if you understand the pieces that sit there, that will help you understand the differences from previously. And most importantly, this G&A reallocation that I referred to where we’ve moved some of the segment costs historically at the same time as we change to this 3-region model, that has increased G&A as company in the reclassifications historically. And that's one of the big changes that you to see hitting the G&A line. And then as a result, that hits this other segment.

Operator

Your next question comes from the line of John Glass for Morgan Stanley.

John S. Glass - Morgan Stanley, Research Division

Troy, I came in a little late. Did you discuss comp store sales? Are they going to be reported in the same method? And when will you disclose those? Same thing goes for unit count, by the way. And if you can talk about comps, how much would history change, for example, the U.S. versus now this new segment or the U.S. and Canada versus this new segment and maybe give relative guidance around the 2 other international segments in comp direction?

Troy Alstead

John, I -- we're looking at what we're going to do on comp reporting going forward. So I think it's a great point you bring up, how much history we might restate and report in that space. So that's something we're looking at. It’s not in what we released yesterday, but I understand the question, so let me speak to it directionally a bit now, and this will be consistently -- consistent actually with how I've spoken about it in the past even though we didn’t disclose historically under these regions. First of all, the Americas is so heavily dominated by the U.S. that the Americas right now, if you look at the U.S. comp growth, that's going to be about the same as what you'd see for the whole Americas comp growth rate. It would move it perhaps some 1/10 of a point generally but not, I think, probably rarely at least in recent history would I expect it to have changed the rounding of that at all. So you can almost assume that the U.S. comp growth had equaled the Americas for some time certainly in 2011. Now in terms of the other regions, China, Asia Pacific has been a strong comp region for us that we have talked about very consistently on each of our quarter calls. At times, China, by itself, comp growth in the 20s and 30s. So that's very, very high. And so as a region, comp growth in that region is extremely high. Now we've also talked historically about Europe being softer for us generally. So Europe comp growth in 2011 has been positive and in recent history has been positive but somewhat lower than the kind of comp growth we've seen in the U.S. Now hopefully, that gives you some directional sense of it now. And again, that is something that we'll look at and think about how best to disclose both as we talk about the new 3 regions going forward but also what we do about the history.

John S. Glass - Morgan Stanley, Research Division

Will you decide that by the earnings call in a couple of weeks?

Troy Alstead

Maybe. I don't know that answer yet.

Operator

Your next question comes from the line of Keith Siegner from Credit Suisse.

Keith Siegner - Crédit Suisse AG, Research Division

The G&A restatement kind of highlights one particular issue which is you now have almost $600 million of G&A in other. You've got almost $750 million in G&A for consolidated. It just kind of reminded me of that factor. Are you -- going forward, are you going to give us any more detail of kind of what the pieces are? What all the different breakdowns are of G&A at least to some extent and where they’re moving? How much of the marketing is going to hit there? How -- could you give us a little bit more sense maybe of what goes into that big G&A number, please?

Troy Alstead

Yes, Keith. The -- and I appreciate your question. Let me speak a bit to it now, but I think -- what I hear in your question is -- will guide us, I think, as we think about from the here forward. Perhaps there is more disclosure we need to do around what’s in G&A. So I'll you give a little bit now in -- but my promise to you is we're going to think based on your question a little bit about how we speak to G&A each quarter from here forward and what we talk about. So we can give you a little bit more understanding what's in there and a little bit more transparency. But in general, and I don't think this part will surprise you, but the unallocated G&A that sits in Other, the corporate G&A is really all the -- effectively, what you call the corporate overhead expenses, largely in Seattle, not fully, but predominantly in our Seattle support center where we have all the functions that are supporting both the business as a company, overall as an enterprise, and then non-distinct indirect support that will be provided globally that some of the businesses do benefit from but that are not about the direct G&A that sits in the businesses. And of course, that's everything from some of the marketing and merchandising people and activities to finance and tax and everything in between. So it's a great breadth of that, that sits in that G&A bucket. Around the world then, and then elements of that G&A gets reported up into each of the segments, there sits the direct G&A that's associated with each of these reporting segments that we have. So in the Americas, as an example, there's a G&A structure that, of course, includes Cliff Burrows and his direct team and some of their direct overhead expenses that are reflected as G&A costs that show up in the Americas; similarly, in China, Asia Pacific; similarly, in EMEA. An important point, which you're aware of from the past and you can easily see even more clearly now with our segments reported separately, is the big distinction between G&A that sits in EMEA; in China, Asia Pacific; in the Americas. And there's 2 or 3 things I'll say about that right now. One is, it's a tremendous opportunity for us, we know going forward to leverage that down in those big international regions. With that said, I would not expect EMEA nor China, Asia Pacific to ever be as low a G&A in terms of the percent as what we get in the Americas. And the Americas just has massive scale that we won't see, at least for a long, long time, anywhere else around the world. The Americas also has the advantage of being able to draft off of our headquarters operations here. So I would just acknowledge to the Americas P&L gets a little bit of an easier ride, not a big chunk of the P&L by any means, but a little bit of an easier ride on G&A than the other regions do where they've got to pay -- they got to kind of pay their own way a little bit more meaningfully than the U.S. and Canada for the most part are able to do. So that gives you a little bit, but I'll take your question to heart. And we'll think little bit more about what disclosure we do around G&A from here forward.

Operator

Your next question comes from the line of Sharon Zackfia from William Blair.

Sharon Zackfia - William Blair & Company L.L.C., Research Division

Most of my questions were answered but, Troy, I just have one clarification. So in the retail segments, what is in the CPG, foodservice and other line?

Troy Alstead

Yes, I'm glad you asked that, Sharon. I think the question came up earlier. I want to make sure I'm clear of it. The -- in the retail segments, in the U.S., and this is an important distinction regionally that I'll appreciate it's a little bit inconsistent. In the U.S., as a business, first of all -- not so much the Americas, but in the U.S., all of the U.S. foodservice and CPG business is in our CPG segment. In every other geography around the world, there is some element of foodservice. Now you'll see as you look through the P&Ls that it's relatively small. Those aren't business segments -- business channels that we've developed very meaningfully outside of the U.S. yet. But because we manage those businesses locally, some primarily foodservice activities end up on the regional P&L, so a bit in the Americas; EMEA; and China Asia Pacific at this time goes. So that's how that distinction sits right now. Time will tell if it becomes important or useful at some point in time for us to rethink how those are managed and reported. But just to be clear, that's why you're seeing that, what looks to be a little bit of an inconsistency right now.

Operator

[Operator Instructions] Your next question comes from the line of Sara Senatore.

Sara H. Senatore - Sanford C. Bernstein & Co., LLC., Research Division

I just want to go back to something that Troy said about the mix as it shifts from owned to more -- or rather from licensed to owned, particularly about Asia Pacific, but wherever we're talking about a mix shift going on. Because you include the cost of goods for license and also for company-operated, it's a little bit tough to see this. So how would we anticipate the complexion of your P&L changing based on what that mix shift looks like? So for example, if it gets more license, would we see it in the costs going -- would it go up? Because I think your gross margins are little bit better in company-operated than they are in license or just give me a sense of how that mix shift would play out?

Troy Alstead

Yes, Sara, and I think that this is definitely something. And I called it out specifically in my prepared remarks because I want to make sure everybody was really aware of it. And as a result, we'll also talk about that as time progresses. So when we talk about guidance and projections going forward, for example, to the extent that, that kind of mix shift is going to impact something, we'll make sure we include that in the dialogue. But for now directionally, this is really about China Asia Pacific. And the reason it's most meaningful there is because we have a very, very big long-standing international license market, and that's in Japan, that's very, very profitable for us. It's one of our largest, perhaps our second-largest outside of the U.S. anywhere in the world in terms of market, in terms of store count. It's very profitable, and we do not consolidate those revenues. So the effect on the company's P&L and then on the CAP regional segment P&L is that you have a very highly profitable income stream that comes from both royalties, which does show up in revenues, margin on inner company products, which shows up in revenues and cost of sales and gross margins. And then very meaningfully, and you can see this reported explicitly in our segment reports, is the JV income. So we pick up effectively 40% of the net profitability of the Japanese business in addition to all those other streams I just mentioned. So the result of that is the effect on Starbucks P&L from Japan is that we have an operating margin from Japan that's well, well north of 100%. And then that skews the whole regional mix right now. So I make this distinction to say that 2 things. Our margins in China Asia Pacific are strong in any event. At the store level in China, we've talked about this historically, they're right around upper 20s, 30%. And I'd expect it to settle into that -- in China in that upper 20s range over time, very, very strong unit margins. At the country level in China, after G&A, and I think I've commented on this at our year-end earnings release, net country margins in China are in the upper teens today, having grown rapidly to that level and improving rapidly still. So I'd expect China operating margins at the country level largely driven by our company-owned business to be well into the 20s at a very healthy basis and stronger than U.S., comparable U.S. operating margins before long. So operating margins across regions are very strong but skewed a bit upwards by that arithmetic around how the licensed JV market, particularly in Japan, flows in. So that's the mechanics behind it, and I go through all that to make sure people understand its mechanics. We certainly target going forward we're going to improve margin in each country. The result of improving margin in each country likely will be a slight moderation of margin for the whole region, and again, that's just because of mix shift. But we will talk more about that as time goes forward. I don't have guidance to give you right now on how many points of that shift I'd expect over the next few years. But I understand that's important, and so we'll think about how to include that into our discussion from here forward.

Operator

Your next question comes from the line of Mitch Speiser from Buckingham Research.

Mitchell J. Speiser - Buckingham Research Group, Inc.

And on the topic of company stores versus license stores, Troy, I believe when you give same-store sales, it is just for company-operated stores. Is there any consideration to give comps on a system wide basis or on license comp and -- in addition to a company comp?

Troy Alstead

Well, you're correct that we report company-operated comps. We certainly look internally in great depths at our licensed market comps, and that's important to us and a big part of understanding and measuring the business. But it's not something we'd disclose just because the different scrutiny that goes around the systems behind those calculations and the audit work that's behind that and so on. Distinct from the kind of scrutiny and just work that would go behind our own company-operated fully audited results as a company. So I don't anticipate that's something that we'll release. Perhaps it's something that we can weave into the dialogue a little bit more directionally, so it's less about a financial release but more about helping you understand what's happening in those license markets. I think that is something we've occasionally done in the past, and I'm sure you will expect to see us do that more as time goes on.

Mitchell J. Speiser - Buckingham Research Group, Inc.

Okay. And just while I have you, just in -- for fiscal '11 in the U.S. or the Americas, can you give us a sense if the license comp was similar to the company-operated comp?

Troy Alstead

No, I don't think that's a separate disclosure I'd go into now because there's so many -- and part of the reason, Mitch, is there's so many buckets to that. We've got a significant license business in the U.S. that you're familiar with in grocery stores and airports and things that generate a certain level of comp that's not included in our company-operated comps but would be part of that license comp growth. Then we also have some license business in Canada. We've got it all throughout Mexico and Latin America. So I'm not sure that consolidated number without a little bit more texture behind it is actually all that relevant and meaningful yet. But to your question, I appreciate it, and we'll try to figure out how best to get that information to you in a useful way going forward.

Operator

Your next question comes from the line of Jonathan Komp from Robert W. Baird.

Jonathan R. Komp - Robert W. Baird & Co. Incorporated, Research Division

Calling in for David Tarantino. Just a question on the comparability of historical margin figures for each of the new segments. I know in the past few years, you've had some restructuring and transformational cost charges, and you've given some non-GAAP margin disclosures for each of the segments. And I guess I'm just wondering if you'll be willing to give the new non-GAAP margin figures for each of the new structures for the historical time periods?

Troy Alstead

Jon, I think you can get at that pretty readily from the financials that we've released. There's a restructuring line on the P&L. And so you could do a little bit of math yourself to get to the comparable, with and without restructuring, margins before and after across the segments. So that's in our disclosure.

Jonathan R. Komp - Robert W. Baird & Co. Incorporated, Research Division

Okay, maybe I just missed it there.

Operator

Your next question comes from the line of Andy Barish from Jefferies.

Andrew M. Barish - Jefferies & Company, Inc., Research Division

It looks like CPG margins are now a little bit higher partly due to lower operating expenses, lower G&A expenses. How do we kind of think about that as we look towards 2012? Obviously, there's been a lot of changes in that business. But do we take that into account sort of as a slightly higher starting point versus previous guidance on CPG?

Troy Alstead

Andy, yes, that change that you're noticing, if you're referring to CPG segment, G&A in -- or margin, excuse me, in, say, 2011, under the old method compared to what it is now, that's completely due to that reclass of G&A expenses that I've mentioned where we pulled some cost that previously sat in each of the segment, including in CPG, and restated those and brought those into the total G&A line on the P&L. So, first of all, it's a net restatement. It's not so much a business change. But the answer to the second part of your question, the answer is yes. This new starting point is now really the right starting point for CPG. This is how we will report it going forward. The reclass expenses are now reflected in that changed margins. So this is how you should think about the starting point from this point forward.

Operator

Your final question comes from the line of Jason West from Deutsche Bank.

Jason West - Deutsche Bank AG, Research Division

I just wanted, Troy, if you could give us just a quick summary in your major company markets, kind of roughly where the company margins are, since you can't really get at that in the P&L you provide for fiscal '11?

Troy Alstead

Jason, that's not something we've disclosed at that level historically. So it's not -- because this call is not about new disclosure at that level, it's not something I'm going through now. But I just will acknowledge, I very much appreciate the -- that, that's meaningful to the financial community. And so as time goes on and particularly with the benefit now and the structure around these regional markets, we will weave into our -- -- we'll certainly weave into our discussions in the quarterly results more texture and context around country level results going forward. Again, that's not what today's call is about, but you can expect a bit more of that from us going forward than we've had in the past. Because I'd really reiterate, the whole -- for us, the whole point of this re-segmentation is really twofold. First and foremost, it's driven by the business as our intent was to get bigger, stronger leaders against smaller, more rational geographies to allow us to really focus on what's unique about each geography and exploit it as best we can. So in China Asia Pacific, it's about dynamic growth to a large degree. Of course, lots of other things are important there, too. In EMEA, it's about transformation, not unlike what we did in the U.S. for example. In the Americas, it's about maintaining that high-margin business and growing in some of the emerging markets. So it allows us to focus in those meaningful different ways. And that was, first and foremost, the number one reason for the change. The second reason it's very valuable is that it allows us to give you more disclosure, both geographically around the world in these regions. And then as a result of that, we'll be able to talk, I think, in a little better framework about country level results and expectations. So not just today, but that is something where -- all this is about positioning us for.

JoAnn DeGrande

Thank you, Troy. So that concludes our call for today. Thank you for joining us. We look forward to speaking with you again soon on January 26 for our Q1 Fiscal 2012 Earnings Results Conference Call. Thank you and have a great weekend.

Operator

This concludes today's Starbucks Coffee Company Segment Reporting Changes Conference Call. You may now disconnect.

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