Starbucks second-quarter earnings to fall 46% as coronavirus hits sales

A worker uses a thermometer to check the temperature of a customer as she enters a Starbucks shop as the country is hit by an outbreak of the new coronavirus, in Beijing, China January 30, 2020.

A worker uses a thermometer to check the temperature of a customer as she enters a Starbucks shop as the country is hit by an outbreak of the new coronavirus, in Beijing, China January 30, 2020.

Starbucks on Wednesday announced that it expects fiscal second-quarter adjusted earnings to fall 46% from a year ago to 32 cents per share.

The company’s stock fell more than 2% in extended trading.

The global coffee chain also withdrew its outlook for fiscal 2020, citing the “dynamic nature” of the coronavirus crisis. Its fiscal 2020 revenue was expected to rise between 6% and 8% and global same-store sales growth was forecast to be in a range of 3% to 4%.

Starbucks said that U.S. same-store sales fell 3% during the quarter, “reflecting the very rapid onset of COVID-19 business impacts in the final three weeks of the quarter.” In the quarter up to March 11, U.S. same-store sales grew 8%.

But U.S. sales for the Seattle-based chain began to decline on March 12 and steadily worsened as it moved to serving only via drive-thru and delivery. In the last week of the month, same-store sales plummeted between 60% to 70%. 

In China, Starbucks’ second-largest market, same-store sales plunged 50% during the second quarter. The company cited temporary closures, reduced hours and the drop in customer traffic. But same-store sales have been improving since they plummeted 90% in mid February as the country slowly returns to a new normal. In the last week of March, same-store sales declined by 42% in China.

The company also said that it is pausing its buyback program. CEO Kevin Johnson defended the program in mid March after the company’s board authorized the repurchase of up to 40 million shares.

Starbucks will report its full second-quarter results on April 28.

This is breaking news. Please check back for updates.

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