Starbucks Reports Big Loss in Q3 Amid Coronavirus

Shares of coffee giant Starbucks were jumping this week when the company reported third quarter results, despite a loss during the period.

The company reported an adjusted loss per share of 46 cents for its fiscal third quarter and estimated that it lost $3.1 billion in revenue due to the coronavirus pandemic. Same-store sales also plunged 40% and transactions at locations open at least 13 months plunged 51%.

On a brighter note, even in the midst of the COVID-19 pandemic, Starbucks still managed to open 130 new locations around the world. Consumers also spent more their orders, sending average check up by 23%.

On an even brighter note, the company has raised the outlook for its adjusted earnings for the fiscal fourth quarter.

According to Starbucks executives, same-store sales are expected to recover more substantially in China and the U.S. by the end of its fiscal first and second quarters. This would be around a year after the crisis began. This is also assuming that there are no new sustained waves of infections or major economic disruptions. Margins are expected to follow in the next two quarters.

“We still have a long ways to go to get back to full recovery, but we’re optimistic based on the strength of our brand and the strategy and initiatives that we have to drive sales and improve margins,” CFO Pat Grismer remarked.

For the fiscal third quarter ended July 28th, the company reported an adjusted loss per share of 46 cents while analysts expected a loss of 59 cents. Revenue at $4.22 billion was higher than the $4.07 billion expected.

Starbucks reported a net loss of $678.4 million, or 58 cents per share, down from net income of $1.37 billion, or $1.12 per share, a year earlier.

Net sales dropped 38% to $4.22 billion, topping expectations of $4.07 billion. The company estimates that the pandemic resulted in $3.1 billion in lost revenue.

CEO Kevin Johnson said some consumers have moved their daily coffee run to later in the morning or early afternoon. “All of this indicates that customers are adapting their routines,” he said.

Looking ahead, Starbucks narrowed its outlook for U.S. same-store sales for the remainder of the fiscal year. U.S. same-store sales are expected to shrink by 12% to 17%. The company previously forecast declines of 10% to 20%.

In China, same-store sales are expected to be roughly flat to down 5% during the fiscal fourth quarter versus a prior estimate of flat same-store sales.

Disclaimer: We have no position in Starbucks Corporation (NASDAQ: SBUX) and have not been compensated for this article.