Starbucks’ revenue shrank 38 percent in its most recent quarter but the coffee giant says it’s recovering faster than expected as its stores reopen from pandemic lockdowns.
The Seattle-based company said Tuesday that it expects losses related to the novel coronavirus to ease through the rest of this year.
“We believe the worst is behind us,” said Chief Financial Officer Patrick Grismer.
Starbucks said 97 percent of its company-operated stores around the world were now open, including 99 percent of stores in China and 96 percent in the U.S. However, some franchised locations remained closed, especially at airports and on college campuses.
The company ended its fiscal third quarter on June 28 with 32,180 stores; a little under half of those are in the U.S.
Starbucks President and CEO Kevin Johnson said quick pivots have helped increase sales. In the U.S. — where 70 percent of its stores are still offering no interior seating — the company introduced a curbside service. It proved so popular that it will be offered at as many as 1,000 locations by the end of September.
U.S. same-store sales, or sales at locations open at least a year, hit a low point in mid-April, when they were down 65 percent compared to the prior year. But by June, U.S. same-store sales were down 16 percent.
Barring new case surges or economic disruptions, Starbucks said its U.S. same-store sales could substantially recover by the end of the company’s fiscal second quarter in March.
Similarly, Starbucks says it believes the company’s same-store sales in China could recover by the end of its fiscal first quarter in December. Starbucks’ China same-store sales were down 19 percent in the third quarter.
Starbucks said it expected global same-store sales declines between 12 percent and 17 percent for its fiscal fourth quarter and the full year.
Johnson said the virus was accelerating Starbucks’ move to pickup-only stores, where customers can grab a mobile order and go. The company is planning to open 50 of those stores in U.S. cities over the next 12 to 18 months and several hundred over three to five years.
The stores will be placed within a three- to five-minute walk of more traditional Starbucks cafes, so customers will still have an option if they want to linger. Similar pickup stores — dubbed Starbucks Now — are opening in China.
“I believe this is one of those rare opportunities to move aggressively and further differentiate Starbucks from our competition,” Johnson said.
The company said Tuesday that revenue in its fiscal third quarter had plummeted to $4.22 billion (¥443.7 billion) from $6.82 billion. That was still ahead of Wall Street’s forecast of $4 billion, according to analysts polled by FactSet.
Global same-store sales were down 40 percent for the April to June period, beating analysts’ forecast of a 42 percent drop.
Starbucks reported a net loss of $678 million for the third quarter, down from a $1.4 billion profit a year ago. Adjusted for one-time items, the company lost 46 cents per share. That was far better than the 59-cent loss analysts forecast.
Starbucks estimates it lost $3.1 billion in sales due to disruption from the novel coronavirus. The company said it spent $350 million during the third quarter on virus-related costs, including temporary premium pay for employees.
Starbucks shares rose almost 6 percent in after-market trading following the release of the earnings report.
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