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Starbucks (SBUX) Trims Guidance Due to Coronavirus Outbreak
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Starbucks Corporation’s (SBUX - Free Report) China business is reeling under the impact of the coronavirus outbreak. However, the company stated that the pandemic disease hasn’t impacted its U.S. business.
Starbucks had closed nearly 80% of its stores in China in early February due to Lunar New Year holiday and the coronavirus outbreak. However, the company announced that it has reopened 90% of the closed stores. Nevertheless, the stores are “operating under elevated safety protocols.”
These store closures have resulted in decline in comparable store sales. In February, Starbucks China’s comparable store sales plunged 78%, year over year, primarily on account of store closures, reduced operating hours and customer traffic. In the second week of February, the company witnessed steepest decline in comparable store sales in China.
The company now expects comparable store sales in China to be down nearly 50% in second-quarter fiscal 2020 compared with the prior estimate of growth of approximately 3%. Consequently, the company anticipates the company’s China revenues to be impacted by $400 million to $430 million due to the coronavirus outbreak. Moreover, the company’s GAAP and non-GAAP earnings per share for the second quarter is likely to be impacted in the range of 15 to 18 cents due to the deadly virus.
Shares of Starbucks have decreased 11.8% in the past month, compared with the industry’s decline of 9.6%.
Global Impact of Coronavirus on Starbucks
Apart from China, the deadly virus has spread to countries including the United States, Italy, South Korea, India, Israel, Saudi Arabia, Sweden, France, Denmark and Japan. In fact, cases of coronavirus have been reported across 75 countries and territories.
Per management, its operations in Japan, South Korea and Italy have also been impacted by store closures and dismal traffic. However, the company is unable to estimate the impact of the coronavirus outbreak in these markets as it is in early stage.
Other major restaurant companies like Yum China Holdings, Inc. (YUMC - Free Report) , Papa John's International, Inc. (PZZA - Free Report) and McDonald's Corporation (MCD - Free Report) have also shutdown majority of their restaurants in China.
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Starbucks (SBUX) Trims Guidance Due to Coronavirus Outbreak
Starbucks Corporation’s (SBUX - Free Report) China business is reeling under the impact of the coronavirus outbreak. However, the company stated that the pandemic disease hasn’t impacted its U.S. business.
Starbucks had closed nearly 80% of its stores in China in early February due to Lunar New Year holiday and the coronavirus outbreak. However, the company announced that it has reopened 90% of the closed stores. Nevertheless, the stores are “operating under elevated safety protocols.”
These store closures have resulted in decline in comparable store sales. In February, Starbucks China’s comparable store sales plunged 78%, year over year, primarily on account of store closures, reduced operating hours and customer traffic. In the second week of February, the company witnessed steepest decline in comparable store sales in China.
The company now expects comparable store sales in China to be down nearly 50% in second-quarter fiscal 2020 compared with the prior estimate of growth of approximately 3%. Consequently, the company anticipates the company’s China revenues to be impacted by $400 million to $430 million due to the coronavirus outbreak. Moreover, the company’s GAAP and non-GAAP earnings per share for the second quarter is likely to be impacted in the range of 15 to 18 cents due to the deadly virus.
Shares of Starbucks have decreased 11.8% in the past month, compared with the industry’s decline of 9.6%.
Global Impact of Coronavirus on Starbucks
Apart from China, the deadly virus has spread to countries including the United States, Italy, South Korea, India, Israel, Saudi Arabia, Sweden, France, Denmark and Japan. In fact, cases of coronavirus have been reported across 75 countries and territories.
Per management, its operations in Japan, South Korea and Italy have also been impacted by store closures and dismal traffic. However, the company is unable to estimate the impact of the coronavirus outbreak in these markets as it is in early stage.
Other major restaurant companies like Yum China Holdings, Inc. (YUMC - Free Report) , Papa John's International, Inc. (PZZA - Free Report) and McDonald's Corporation (MCD - Free Report) have also shutdown majority of their restaurants in China.
Starbucks currently carries a Zacks rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>