The global coffeehouse chain said in an SEC filing that its China same-store sales declined 78 percent in the month of February compared to the same period one year ago. Starbucks attributed the plunge to “temporary store closures, reduced operating hours and severely reduced customer traffic” in the region.
Starbucks said the sales slump in China would likely reduce its second-quarter earnings by 15 cents to 18 cents per share. For the full quarter, same-store sales at Starbucks locations in China are expected to drop by roughly 50 percent, reduced expected revenue in the country by approximately $400 million to $430 million.
“Although there are near-term financial implications, our long-term, optimistic outlook for the growth potential of Starbucks is undiminished,” Starbucks said in the SEC filing. “In fact, recent events strengthen our conviction in the long-term opportunity and reinforce the trust in and resilience of the Starbucks brand.”
More than 95,000 confirmed cases of coronavirus infection have been reported worldwide. At least 3,280 people have died, with most virus-related deaths occurring in China.
Starbucks shares fell more than 4 percent in trading Thursday amid losses in the broader U.S. market.
At one point in early February, Starbucks closed about 80 percent of its store locations in China. The company said that more than 90 percent of its China stores are open as of this week but are operating with precautionary measures in place.
Safety protocols include reduced lobby service and seating for customers, as well as an emphasis on mobile orders rather than traditional transactions.
Starbucks said its China business is “showing early signs of recovery” and added that its U.S. operations have not been materially affected by the coronavirus outbreak.