Starbucks Foresees $3.2 Billion Loss Because of Coronavirus Pandemic; Plans to Revamp Stores for Mobile Coffee Orders


Starbucks foresees as much as $3.2 billion in revenue loss in the fiscal third quarter due to the coronavirus pandemic. In a CNBC report, company shares dropped more than 3% in early trading Wednesday, June 10, while the stock, which has a market value of $92.6 billion, fell 10% this year.

Starbucks forecasted a net loss per share of 64 cents to 79 cents while it adjusted losses of 55 cents to 70 cents per share for the third quarter ending June 28.

Also, the forecast for same-store sales growth is worse. The company’s same-store sales in the United States and China are expected to fall 10% to 20% for the full fiscal year. By the end of the fiscal fourth quarter, Starbucks’ sees China’s same-store sales to make even while that in the U.S. will stay negative.

Starbucks is optimistic for its fiscal fourth-quarter earnings and expects 11 cents to 36 cents net income per share and adjusted earnings of 15 cents to 40 cents per share. It expects weekly cash flow to be positive by the end of the month. 

In a letter to stakeholders, CEO Kevin Johnson and CFO Pat Grismer said the company is “seeing clear evidence of business recovery, with sequential improvements in comparable-store sales performance” every week.

“The Starbucks brand is resilient, customer affinity is strong and we believe the most difficult period is now behind us,” they wrote in the letter.

As the company reopened stores in the U.S. last month, same-store sales dropped 43% as they have limited hours and operations. By the end of the month, 91% of U.S. stores had been reopened, but sales continued to decline by 32%. 

Currently, only 5% of the U.S. stores remain closed, particularly those located in New York City.

In China, same-store sales fell 21% in May, which slightly increased from 32% in April. Then, it further improved in the last week of May with down 14% compared to last year.

About 90% of cafes in China are back to their regular operating hours before the pandemic with 70% full seating capacity. Starbucks has opened 57 new stores in China in April and May.

In the U.S., the company is also opening new stores with its plan to open about 300 net new locations in fiscal 2020 in the segment, which is merely half from its planned 600.

However, the company also plans to close about 400 company-owned cafes over the next 18 months while it plans to make revamps on U.S. locations over the next five years.

This is to adapt to an increase in customers making orders through the Starbucks app. However, the pandemic delays these improvements.

Starbucks plans to add pick-up stores in busy streets in New York, Chicago, and San Francisco. These cafes will have walk-up windows, curbside pick-up for mobile orders, and drive-thru lanes. In November, it opened its first mobile pick-up location in Manhattan’s Penn Plaza.

Starbucks stores will also have a separate counter for mobile order pick-up from customers and delivery couriers at busy locations.

Read also: PlayStation 5’s Bloodborne also Launching On PC, In ‘Remastered’ Version


About Author

Leave A Reply