In China and Asia-Pacific or CAP, the strong momentum that built throughout 2011 continued in the first quarter of fiscal 2012. Net revenues increased by 38%, driven largely by rapid new store growth, along the same-store sales growth of 20%. The strong comps were comprised of a 15% increase in transactions and a 5% increase in average ticket. All 4 of our company-owned markets in CAP posted double-digit comps, with China leading the way at 28%.

We have now recorded greater than 20% comps for 6 consecutive quarters in China. Consistent with results across our global store base, the holiday platform produced very solid results as well. Additionally, we're gaining traction on our loyalty program, with nearly 250,000 My Starbucks Rewards members already signed up in China. Strong holiday merchandise sales contributed to the higher average ticket.

Operating income in CAP was also strong, increasing 26% to $58 million in the first quarter. Operating margin contracted 350 basis points to a still outstanding 34.6%, resulting from higher performance-based compensation, higher costs necessary to fuel our expansion in this region, as well as 200 basis points related to higher commodity costs. While store operating expenses and costs increased, we saw solid leverage on occupancy and depreciation from the additional sales.

Given the consistency of strong results in China/Asia-Pacific, we're going to continue to accelerate growth in the region. We opened 121 net new stores in Q1, the highest of our 3 retail regions. The growth came from 48 net new stores in mainland China, where we continue to see extremely strong returns that are surpassing our initial projections. Sales to investment ratio in mainland China is more than 2.5:1, and first-year, cash-on-cash returns are the highest in our system. Better store growth contributors in CAP in Q1 included South Korea, where we opened 24 net new stores and Japan with 15 net new stores.

Question-and-Answer Session

Michael Kelter - Goldman Sachs Group Inc., Research Division

I wanted to ask about China. First off, China ticket was up 5%. Does that represent a price increase to offset inflationary pressures? Or is there some sort of a change in the way consumers are interacting with the brand in China? And then also in China, the acceleration in unit growth which you're now actually starting to see, curious if you're bumping into any internal or external bottlenecks, and what you're finding you have to tweak as you accelerate the trajectory there?

Howard D. Schultz

This is Howard and we've got John Culver here, the President of that region. So John?

John Culver

Yes, I would say that -- I mean, what we're seeing in China is on the ticket side, there's no impact from pricing. So we have not taken pricing in China. So what you're seeing is real. The comp growth is mainly being driven by transaction. We continue to accelerate the new store growth across all the markets. We now sit in 41 cities across the country. We opened our 500th store this quarter, and this past quarter, we opened 5 new cities, all right. So what we see is continued acceptance of the Starbucks brand and the Starbucks Experience. And in terms of any kind of bottlenecks or barriers, clearly, we are ramping up the investment around the infrastructure, and back-in-the-house systems. So IT systems, as well as supply chain systems and distribution capabilities, and then also, continuing to accelerate the advancement around hiring ahead of the curve, particularly around store operations, as well as with the store development teams. To help drive the growth, we're also accelerating the ability to design stores in market. So we've made significant investment from a store development standpoint of shifting the resources back here in Seattle, and pushing that out into China, into markets of the world much closer and much quicker in the market. And then we've also added additional investment in China around research and development to really capture the consumer trends in China, and to drive innovation that really is going to be impactful for the Chinese consumer.