Starbucks estimates a £2.50 billion hit to its revenue in Q3 due to the Coronavirus pandemic

Starbucks (NASDAQ: SBUX) said on Wednesday that its revenue took a hit of about £2.50 billion due to the ongoing Coronavirus pandemic in the fiscal third quarter. Consequently, the company now expects to see a quarterly loss in Q3. Starbucks’ same-store sales slumped 10% in Q2.

At £64.75 per share, Starbucks is currently more than 5% down year to date in the stock market after recovering from a low of £44.08 per share in March. It has a market capitalisation of £75.29 billion and a price to earnings ratio of 29.31.  

Starbucks’ guidance for the fiscal third quarter

The coffee chain said that its per-share adjusted loss is likely to fall in the range of 43.04 pence to 54.78 pence in the quarter that will end on 28^th June. Its earnings, Starbucks added, are expected to recover in the fourth quarter. The company anticipates 11.74 to 31.30 pence of adjusted earnings per share in Q4.

For the full financial year, Starbucks forecasts a 10% to 20% decline in its comparable-store sales in both of its key markets; China and the United States. In May, Starbucks requested its landlords to reduce rent for the next year due to the novel financial challenges posed by COVID-19.

By the end of May, Starbucks had resumed operations at about 91% of its stores in the U.S. Its same-store sales in the U.S. tanked 43% last month. The decline, however, contracted to 32% in May’s last week.

The majority of the Starbucks stores in the U.S. that are still closed due to the health crisis are located in New York.

Starbucks’ reports a 21% decline in same-store sales in China

In China, the American multinational chain of coffee houses reported a 21% decline in comparable-store sales in May as compared to a broader 32% decline in April. On a year over year basis, same-store sales were seen only 14% down in China in the last week of May.

Starbucks also revealed on Wednesday that 90% of its stores in China have now returned to pre-virus operating hours. Full seating, it added, is available at 70% of the cafes. In the last two months combined, the coffee company opened a net total of 57 new stores in its largest Asian market.

The pandemic has also pushed the company into ramping up its efforts to expand pickup stores in the denser or urban U.S. markets including San Francisco, Chicago, and New York. In its cafes located in suburban areas, Starbucks plans on adding curbside pick-up, walk-up windows, and double drive-thru lanes. In November, the U.S. company also launched its 1^st mobile pick-up service in Manhattan.