Starbucks Logs First Quarterly Sales Drop in 11 Years
April 28 2020 - 5:00PM
Dow Jones News
By Heather Haddon
Starbucks Corp. said global same-store sales dropped 10% in the
first quarter as a result of the coronavirus crisis, the first
downturn by that measure in nearly 11 years.
The coffee giant said Tuesday that it expects the impact of the
pandemic to be even larger in its current quarter, and to continue
to depress its business to a lesser extent later in the year. The
Seattle-based company said it expects the virus's impact to be
temporary and that its business will eventually recover.
Starbucks has taken some of the strongest measures among
restaurant companies to safeguard workers and customers in response
to the virus. It was one of the first national chains to restrict
dine-in service, eventually shifting nearly all of its sales to
drive-through and delivery. It has paid workers at company-owned
stores to quarantine and compensated employees who chose to stay
home for 30 days rather than work.
Those measures have come at a cost. Starbucks's earnings per
share adjusted for unforeseen expenses, including the added worker
pay, came to 32 cents a share. Analysts polled by FactSet had
expected adjusted earnings of 34 cents a share.
The company's shares declined 1% to $78.
Roughly 50% of Starbucks's company-owned stores in the U.S. are
closed. The others have continued with drive-through and delivery
sales. Starbucks has said it won't open dine-in service at U.S.
cafes soon, relying on drive-through, delivery and pickup sales for
now. The chain plans to begin reopening closed stores with the
modified service on May 4. Starbucks has said it will continue to
pay workers an extra $3 an hour through the end of May.
The company's China business has felt the virus's impact since
January, with same-store sales declining 90% at the peak of the
outbreak there, in mid-February. Starbucks said last month that it
would suspend work to open new stores in its second biggest market
for now. Nearly 100% of its stores in China are now running with
limited hours and modified service
The same-store sales decline put an end to 41 consecutive
quarters of global growth for Starbucks. Starbucks's sales in
stores open for at least 13 months last declined in 2009 during the
recession.
The company reported earnings per share of 28 cents on $328
million in profit. Global sales for the second-quarter ending in
March came to $6 billion, down 5% from the year before. Analysts
had expected $5.9 billion in sales and an 8.5% drop in same-store
sales.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
April 28, 2020 16:45 ET (20:45 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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