Starbucks Sees $400 Million-$430 Million 'Headwind' Due to Coronavirus in China
March 05 2020 - 5:52PM
Dow Jones News
By Stephen Nakrosis
Starbucks Corp. on Thursday said as a result of the impact of
the coronavirus on its operations in China, it is expecting "a
COVID-19-related headwind of approximately $400 million to $430
million to China's revenue" in the second quarter of fiscal year
2020.
Prior to the outbreak of the Covid-19 strain of coronavirus, the
company said, it was expecting comparable store sales growth in
China to be about 3% in the period.
The company said the latest estimates reflect its expectations
that "substantially all stores in the market will be open by the
end of the quarter and that traffic will improve modestly for the
balance of the quarter relative to February's swift and severe
slowdown."
The company said it currently has over 90% of its stores in
China open, but also said those locations were operating under
"elevated safety protocols," which include limited lobby service
and use of mobile ordering for contactless service.
The majority of stores in China are operating at reduced hours,
the company said, adding some locations are offering only delivery
services.
Planned development of new stores has been paused in China,
Starbucks said, with some store openings planned for fiscal year
2020 likely being deferred to fiscal year 2021.
"As the COVID-19 situation continues to evolve globally,
Starbucks business operations in Japan, South Korea and Italy have
also been impacted by store closures and/or reduced customer
traffic. Given the early stage of these developments, we are
currently unable to forecast business impacts in markets outside of
China with reasonable accuracy. We are also currently unable to
estimate business impacts beyond Q2 FY20 with reasonable accuracy.
Therefore, our current estimate of the impact of the COVID-19
outbreak on our financial performance is limited to Q2 FY20 and
does not include potential business impacts in any Starbucks
markets beyond China," the company said.
Starbucks also said that to date it has seen "no perceptible
signs of COVID-19 impact on our U.S. business."
--Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
(END) Dow Jones Newswires
March 05, 2020 17:37 ET (22:37 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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