Starbucks Feels the Brew‑Breeze of the Pandemic
On Wednesday, Starbucks Corp. announced that its second‑quarter earnings are expected to tumble 47 percent, wiping out the full‑year forecast it had earlier. The juicy news says the COVID‑19 bout will keep kicking the company until the very last quarter of fiscal year 2020.
What’s the Bite on the Balance Sheet?
- Projected Q2 earnings per share: $0.28 (down from $0.53 the year before).
That’s a big whiff of lost sales and rising costs. - Same‑store sales in the U.S. dipped on March 12 and have been falling faster than a latte on a rainy day.
- China revenue lagged about $400 million (S$570 million) short of expectations, with comparable store sales down 50 percent in the second quarter.
How Starbucks Is Surviving
Like most eateries, Starbucks had to lock the doors, shift its focus to drive‑thru, pick‑up, and delivery modes, and keep the crowds at bay. The move is all in line with government mandates and a common goal: curb the spread of the virus.
In an effort to survive the storm, the company will pause its share buyback program for now and cut costs. Yet, the quarterly dividend will still make it to the shareholders’ cups.
When Will the Numbers Be Served?
Expect the final, slightly bittersweet, second‑quarter earnings report on April 28.
Keep sipping (or watching) the latest COVID‑19 updates here.
