Starbuck revenue down 5% due to COVID-19, further declines expected

Starbucks has reported a 5 per cent decline of consolidated net revenues to US$6 billion for the financial quarter ended on 29 March 2020, compared to the year prior.

The coffee chain attributed this to lost sales related to the COVID-19 outbreak, including the effects of temporary store closures, modified operations, reduced hours, and reduced customer traffic.

“Since the beginning of this global crisis, Starbucks has made decisions that prioritise the well-being of our partners and customers, support health and government officials, and responsibly serve our communities. This principled approach is showing steady business improvement in China where today, substantially all existing Starbucks stores have reopened with modified operations, new store locations are being added and customer engagement continues to grow with each passing week,” Starbucks CEO Kevin Johnson says.

“We are leveraging our experience in China to inform our actions in other markets, including the United States, where we are now entering the ‘monitor and adapt’ phase to reopen many more stores with best-in-class safety protocols. 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’ global comparable store sales declined 10 per cent year-on-year. This was driven by a 13 per cent decrease in comparable transactions, partially offset by a 4 per cent increase in average ticket.

International comparable store sales were down 31 per cent, driven by a 32 per cent decline in comparable transactions, slightly offset by a 1 per cent increase in average ticket. China comparable store sales were down 50 per cent, with comparable transactions down 53 per cent.

Americas and US comparable store sales declined 3 per cent, driven by a 7 per cent decrease in comparable transactions, partially offset by a 5 per cent increase in average ticket.

The company opened 255 net new stores in the quarter, yielding 6 per cent year-over-year unit growth, ending the period with 32,050 stores globally, of which 51 and 49 per cent were company-operated and licensed, respectively.

Stores in the US and China comprised 61 per cent of the company’s global portfolio at the end of the quarter, with 15,257 and 4351 stores, respectively.

Starbucks Rewards loyalty program grew to 19.4 million active members in the US, up 15 per cent year-over-year.

“People around the world are united around a common cause as we navigate the COVID-19 situation globally. We are very grateful for the heroic efforts of medical personnel, first responders, government officials, and volunteers who are working tirelessly in the service of others,” Starbucks CEO Kevin Johnson says.

“I am exceptionally proud of the thousands of Starbucks partners around the world who are safely serving customers and playing a positive role in every community we serve.”

Starbucks expects the impact of COVID-19 to intensify from April to June and moderate from July to September. It expects substantial recovery, particularly in China, by the end of fiscal 2020.

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