Starbucks Logs Another Sales Hit from Coronavirus
July 28 2020 - 4:11PM
Dow Jones News
By Heather Haddon
The coronavirus is still weighing on Starbucks Corp.
The coffee giant on Tuesday reported its steepest earnings per
share losses in more than a decade as a result of lower sales and
higher costs stemming from the pandemic. Global same-store sales
plunged by 40% in the quarter ending in June, and the Seattle-based
chain reported a loss of $704 million, down around 17% from a year
earlier.
But that was better than many analysts expected given the
severity of the blow the pandemic has dealt to the Starbucks, first
in China, then across Asia, Europe and the U.S. The chain said it
expects the worst effects of the virus to moderate in its current
quarter.
Shares of Starbucks rose 3% to $77 in after-hours trading.
Big chains have generally performed better than independent
restaurants during the pandemic due to their drive-throughs and
established takeout operations. But chains have also notched big
sales hits. McDonald's on Tuesday said its same-store sales fell
24% globally in its most recent quarter, and it expects the virus
and resulting economic downtown to depress consumer spending for
some time.
Starbucks was early among chains to close stores as a result of
the coronavirus and to pay employees bonuses or allow them to stay
home if they weren't comfortable working during the pandemic. It
said it lost $3.1 billion in sales during the third quarter due to
store closures, limited hours and fewer customer visits.
Starbucks said 96% of its company-owned U.S. stores are now open
with at least to-go and limited dine-in service. The company has
beefed up delivery and pickup services that it intends to keep. It
also is building more to-go only stores in the U.S.
The coffee chain said it expects global same-store sales
declines of 12% to 17% for its fourth-quarter and full year and for
revenue to decline by 10% to 15% compared with the previous
quarter. Starbucks said it expects earnings of 6 cents to 21 cents
a share for its fourth quarter.
For the third quarter, spending on worker pay, benefits and
protective equipment hurt margins. The chain's Americas segment
reported operating losses of $405 million during the quarter. The
company said it had $4.2 billion in sales in the quarter, down 38%
from the prior year's period but better than expectations of
analysts' polled by FactSet.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
July 28, 2020 16:56 ET (20:56 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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