Starbucks Says Second Quarter Sales Will Be Impacted by Coronavirus Closures

Coffee giant Starbucks had to close stores in China amid the coronavirus outbreak and has announced that while businesses are now recovering, second quarter sales will be impacted by the closures.

The company said this week that sstore closures in China due to the coronavirus outbreak are likely to result in a 50% decline in its same-store sales in China during its fiscal second quarter.

According to an SEC filing, for the entire fiscal year, the closed stores will slash revenue by between $400 million and $430 million in China. During the first quarter, China made up about 10% of its revenue.

Before the coronavirus outbreak, Starbucks predicted China’s second-quarter same-stores sales growth would be about 3%.
Over 90% of the company’s stores in China are now open but are operating under elevated safety protocols, including minimal cafe seating. The cafes have also reduced store hours due to overall low levels of foot and vehicle traffic, said Starbucks.

Starbucks said that it plans to have all stores to open by the end of the quarter and travel “will improve modestly.”

“In short, we see encouraging signs of recovery in China, our U.S. business momentum continues, and we are prepared to respond to implications of COVID-19 in every market around the world,” Starbucks CEO Kevin Johnson said in the SEC
filing.

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