In the company’s Q2 preliminary financial results, Starbucks is reporting 60-70% same-store sales declines in the last week of March related to the coronavirus crisis, according to the company’s latest SEC filing. By the end of the month, 56% of U.S. company-owned stores were closed, and 45% of licensed stores were closed and most of the stores that remained open were drive-thru locations or licensed units in grocery stores.
Prior to March 11, Starbucks same-store sales were trending at +8% for the quarter, with transaction growth at 4%. Despite what Starbucks is calling a “strong performance” of these first 10 weeks of the quarter, same-store sales were down 3% systemwide for the second quarter vs. the prior year, reflecting the rapid decline related to the COVID-19- pandemic. The estimated earnings per share is expected to be 32 cents per share.
“Although the virus did not begin to materially impact our U.S. business results until mid-March, we took progressive steps to contain the spread of the virus starting in late February,” CEO Kevin Johnson said in the SEC filing. “We are exceptionally proud of the many green apron partners who have continued to safely serve customers while finding ways to directly support those who are keeping our communities safe.”
In China, however, the dire situation is greatly improving. Starbucks reports that 95% of its stores in China are open and same-store sales gradually improved to a 64% decline in March, as compared with a 78% same-store sales decline in February. By the last week of March same-store sales declines had dwindled to 42%.
China’s overall Q2 performance was “at the lower end” of their projections, driven by a 50% drop in same-store sales for the quarter, “primarily due to temporary store closures, reduced operating hours and severely reduced customer traffic during the period.”
“We expect the negative financial impacts to Q3 to be significantly greater than they were in Q2 and to extend into Q4,” Kevin Johnson said in the SEC filing. “In any event, based on our substantial experience in China to date, we continue to believe that these impacts are temporary and that our business will fully recover over time.”
Starbucks is expected to report its second quarter earnings on April 28.
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