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Starbucks (SBUX) Starts Reopening Stores in Several Countries

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Starbucks Corporation (SBUX - Free Report) recently decided to reopen stores in Italy and Japan following the coronavirus-induced shutdown. Notably, the company currently has 90% of its stores open in China, while 85% of its stores in the United States are open for delivery. 

The company, which has 1,550 stores in Japan, has reopened many of its stores starting Tuesday. However, these stores are only open for take-out and drive-through services. Moreover, company announced that it will open its cafes in Italy barring its flagship location in central Milan. The company further added that it will follow the government's rules and social distancing.

The company’s shares have fallen 15.4% in the past three months owing to the pandemic, compared with the industry’s decline of 17.9%. 

Coronavirus to Hurt Results

The company anticipates the impact of coronavirus to intensify in third-quarter fiscal 2020 only to moderate in fourth-quarter fiscal 2020. In the second-quarter fiscal 2020, the COVID-19 pandemic impacted the company’s performance between two to three weeks. However, it anticipates an impact of 13 weeks in third-quarter fiscal 2020. The impact of the deadly virus is expected to lessen in the month of May and June after wreaking havoc in April. Starbucks expects substantial recovery in China by the end of fiscal 2020.

Moreover, estimates for current quarter and year have witnessed sharp downward revisions. In the past 30 days, the Zacks Consensus Estimate for third-quarter and fiscal 2020 have witnessed downward revisions of 32 cents and 53 cents, respectively. 

Starbucks currently has a Zacks Rank #4 (Sell).

Key Picks

Some better-ranked stocks worth considering in the same space include Domino's Pizza, Inc. (DPZ - Free Report) , Wingstop Inc. (WING - Free Report) and Yum China Holdings, Inc. (YUMC - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Domino's Pizza, Wingstop and Yum China have an impressive long-term earnings growth rate of 12.5%, 11% and 9.5%, respectively.

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