Get all the latest news on coronavirus and more delivered daily to your inbox. Sign up here.
Starbucks sales plunged during the second quarter after the coronavirus pandemic forced the coffeehouse chain to limit operations at most of its North American stores, the company confirmed in an earnings release Tuesday.
The Seattle-based company said its U.S. same-store sales fell 3 percent in the quarter, while global same-store sales declined 10 percent. Same-store sales were down 50 percent in China for the period, though most locations have since reopened in that region.
Starbucks reported adjusted earnings per share of 32 cents, down 47 percent compared to the same quarter one year ago. Revenue plunged five percent to $6 billion.
“We are leveraging our experience in China to inform our actions in other markets, including the U.S., where we are now entering the 'monitor and adapt' phase to reopen many more stores with best-in-class safety protocols,” Starbucks CEO Kevin Johnson said in a statement. We continue to navigate this dynamic situation — which we believe is temporary — and are confident that Starbucks will emerge from this global crisis even stronger than before.”
Starbucks ticked down about 1 percent in after-hours trading. The company’s stock was down about 11 percent so far this year as of market close Tuesday.
About 90 percent of company-owned U.S. stores are expected to reopen by early June. Starbucks expects the pandemic to negatively impact U.S. same-store sales into the fourth quarter.
The earnings report was in line with projections Starbucks released regarding the pandemic’s impact on its business in an SEC 8-K filing earlier this month. At the time, the company noted its U.S. same-store sales were up 8 percent prior to March 11 when authorities began implementing shelter-in-place orders.
Starbucks withdrew its full-year guidance for fiscal 2020, citing uncertainty related to the pandemic.
Starbucks stores in the U.S. and Canada have operated with limited service for weeks, with most locations restricted to drive-thru service only. In an April 16 letter to employees, Johnson said the company was exploring plans to reopen U.S. stores on a case-by-case basis.
Johnson noted that Starbucks would utilize guidance from local public health officials, community sentiment and the readiness of individual stores to determine when to ramp up operations at particular locations. Some stores would remain limited to drive-thru service, while others could allow contactless pickup services and in-store to-go orders.
Starbucks implemented measures to aid employees during the crisis, including expanded paid sick leave, catastrophe pay for workers exposed to the virus and an extra $3 in hourly wages for employees who worked their normal shifts. The company extended those temporary benefits through the end of May.