SBUX Starbucks Corporation

By Heather Haddon 

Starbucks Corp. sought to reassure investors that it can withstand the coronavirus pandemic.

Chief Executive Kevin Johnson said during the company's annual shareholders meeting that Starbucks's experience in China when coronavirus spread there earlier this year had prepared it to handle the spread in the U.S. He called the pandemic a temporary business setback.

"We are a resilient company," Mr. Johnson told attendees of the annual meeting, which was held virtually after the company canceled plans to convene at a theater in downtown Seattle.

The pandemic has hit Starbucks hard, first in China, then in South Korea and Italy, and now in its home market. The closure of more than half of Starbucks's stores in China during the height of the outbreak there is likely to result in more than $400 million in losses during the current quarter, the company said. Construction of new stores in China has also been pushed back.

Starbucks also has closed dining rooms at its U.S. cafes, switching to takeout and drive-through orders only. Starbucks was one of the first U.S. chains to close its dine-in services in response to the virus. McDonald's Corp., KFC, Chipotle Mexican Grill Inc. and many other chains have since done so. Restaurants are continuing delivery, carryout and drive-through services in the meantime.

The spreading economic emergency has pushed up Starbucks's debt levels, executives said. The company authorized the repurchase of up to 40 million shares of its common stock.

"We will see a recovery over time," Chief Financial Officer Patrick Grismer said. Companies including Gap Inc. and Nordstrom Inc. have suspended share buyback plans to preserve cash since the pandemic began.

Shares in Starbucks fell 4.5% on Wednesday, compared with a 5.2% drop in the S&P 500.

Workers at Starbucks, McDonald's and other chains have also protested having to continue their public-facing jobs as the highly contagious virus spreads. The federal government has recommended that workers who can perform their jobs from home should do so and that gatherings be limited to 10 people.

Some Starbucks workers have said they are unhappy that they must continue to come to work and potentially expose themselves to the virus. Baristas have flooded online and company message boards with complaints that their stores haven't fully closed.

"Coffee is not a necessity," wrote one barista on an internal company site Wednesday. "Let us be safe with everyone else, just as the government suggested."

More than 16,000 people have signed a letter organized by a barista at a Philadelphia Starbucks calling for the company to shut down its thousands of U.S. stores. A group of employees that calls itself the Committee of Concerned Baristas, are calling for employees to walk out of stores and for consumers to boycott Starbucks on Monday.

"Baristas believe the best loyalty we can give to our loyal customers is to shut down," said Adelynn Campbell, an employee at a Starbucks in Wyoming, Mich., who is helping to organize the boycott. Some workers at the store haven't been showing up for shifts since the company closed its dine-in service, Ms. Campbell said.

"We will continue to review the facts and science and make the proactive decisions necessary to protect our partners, customers and communities," Rossann Williams, president of the U.S. company-operated business and Canada, said in a letter to employees Sunday.

Starbucks executives said they were committed to protecting employees' health. The company has pledged two weeks' pay during quarantine for any worker who contracts the virus or believes they might have been exposed to it.

Employees who suspect they may be infected can stay at home for three days, and workers at a closed store will be shifted to another location or receive catastrophe pay, Starbucks said.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

March 18, 2020 18:42 ET (22:42 GMT)

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