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Starbucks to Expand in Malaysia

Jun 27, 2013

Starbucks Corporation (SBUXAnalyst Report)) recently announced its plans to open 100 new stores in Malaysia over the next four years. Starbucks cafes have been present in this South-East Asian market for 15 years and currently the company has 141 stores across the country.

Earlier, in April, the coffee giant had announced plans to open 100 new stores each in other lucrative South East Asian markets of Indonesia and Philippines over the next 3-4 years. Starbucks also plans to double the number of stores in Thailand over the next five years.

Starbucks already has a presence across 6 South-East Asian countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, through more than 700 stores.

The Starbucks brand is gaining popularity with consumers across Asia as the company continuously expands its store base outside the U.S. Starbucks is increasingly investing in the Asian markets, which have significant growth potential due to their relatively low per-capita consumption and burgeoning middle class population with rising income levels. This in turn is increasing the demand for convenience food and beverages.

Management believes that its China and the Asia-Pacific (CAP) segment, which has grown 33% (in terms of revenues) since 2010, will drive more meaningful business growth over the next 5 years. Starbucks’ business in China is rapidly growing and the region is expected to become the company’s second-largest market by 2014. The company is looking forward to take the store count in this region to 1,500 in 70 cities by 2015. Starbucks has 12 stores in the lucrative Indian market and opened its first store in Vietnam this year.

Other Stocks to Consider

Starbucks carries a Zacks Rank #2 (Buy). Some other stocks in the retail/restaurant industry that are currently doing well and are worth considering include CEC Entertainment Inc. (CECSnapshot Report) and Brinker International, Inc. (EATAnalyst Report), both carrying a Zacks Rank #1 (Strong Buy) and Bloomin’ Brands, Inc. (BLMNSnapshot Report), carrying a Zacks Rank #2 (Buy).

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