Starbucks Hit Hard by COVID-19... "Store Sales Down 10%"

50% Drop in China Sales in February... 15-25% Decline Expected Even with Recovery in Second Half
Over Half of US Stores Closed in March... Next Quarter Earnings May Worsen Further

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Starbucks announced that its sales have decreased by more than 10% compared to the same period last year due to store closures in the United States and China caused by the novel coronavirus disease (COVID-19). In particular, in China, where the sales decline is significant, it is feared that even if there is a recovery trend in the second half of this year, sales could decrease by up to 25%.

According to CNBC, Starbucks announced its financial results for the second quarter of fiscal year 2020 (January to March 2020) on the 28th (local time). Starbucks' global store sales were reported to have decreased by 10% compared to the same period last year due to the impact of COVID-19. Starbucks stated that a larger decline in performance is expected in the next quarter. Starbucks' net sales from January to March this year recorded $6 billion, down 5% from the same period last year, and earnings per share were 32 cents. Net income for the same period was $328 million, less than half compared to last year. Net income for the same period last year was $663.2 million.

Starbucks explained that the spread of COVID-19 in China in February, which led to the closure of most stores, had a significant negative impact. Store sales in China fell by 50% amid large-scale closures. In February, store sales in the United States fell by only 3%. The estimated sales loss due to store closures is approximately $915 million. Even if sales in China recover from the second half of the year, Starbucks expects store sales in China to decrease by 15-25% compared to last year.

Furthermore, in March, as COVID-19 spread in the United States, major stores were closed or operating hours were shortened, which is expected to have caused a decline in sales. Starbucks stated that about half of Starbucks stores across the United States were closed in March, and it is expected that about 90% of stores in the U.S. will resume operations by early June. Accordingly, from the next quarter's results, the decline in U.S. sales could be even greater. Starbucks also announced that it has decided to suspend its share repurchase program amid the COVID-19 crisis.

This content was produced with the assistance of AI translation services.