Starbucks global same-store sales slump 10% in Q2 on COVID-19 shutdowns

Starbucks Corporation (NASDAQ: SBUX) released its second-quarter earnings report on Tuesday that posted a 10% decline in its global same-store sales. The company cited Coronavirus shutdowns in both of its primary markets, the U.S and China, to have weighed heavily on business in Q2.

Starbucks also forecasts an even stronger hit to its financial performance in the third quarter due to the pandemic despite its sales slowly starting to recover in China as it reopened stores recently.

Following the release of results, the stock was reported around 1% down in after-hours trading on Tuesday.

Starbucks Q2 financial results versus analysts’ estimates

According to Refinitiv, analysts had forecast the company to print £4.73 billion in revenue in the second quarter. In terms of earnings per share (EPS), their estimate was capped at 27 pence per share. In its financial report on Tuesday, however, Starbucks topped estimate for revenue posting £4.82 billion in the recent quarter but fell slightly short on earnings making 26 pence per share in Q2.

The American multinational chain of coffeehouses recorded its net incomes at £264 million in the second quarter that was significantly lower than £533 million that it posted in the same quarter last year. The company cited an increase in hourly wage, catastrophe pay to baristas, and safety expenditures including face coverings for a decline in profits in Q2.

At £6 billion, Starbucks’ net sales were 5% down versus the year-ago figure, primarily attributed to government restrictions that closed cafes and restricted consumer to their homes amidst the health crisis. Lower customer traffic, reduced operating hours, and store closures at large, as per Starbucks, resulted in a £735.50 million hit to its sales in the recent quarter.

Starbucks overall global transactions tanked 13% in Q2

The coffee chain reported a 3% decline in its comparable-store sales in the U.S and a much broader 50% drop in same-store sales in China. Starbucks’ overall transactions tanked 13% globally in the second quarter. In China, the company expects a 15% to 25% slump in same-store sales this year.

Starting in late February, Starbucks has now reopened roughly 98% of its stores in China. The company expects to reopen 90% of its company-operated cafes in the U.S by early June.  

Starbucks closed the recent quarter on March 29^th with £2.07 billion in cash and investments securities on hand.  

The £74.24 billion company is currently a little over 10% down year to date in the stock market.