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Starbucks Comps Recover in US & China After Store Reopening

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Starbucks Corporation (SBUX - Free Report) reopened more than 85% of its stores in the second week of May. The company said that over the past week, it has regained nearly 60-65% of year-earlier U.S. comparable-store sales.

The company expects to open more than 90% of U.S. company-operated stores by early June. Starbucks CEO Keith Johnson said, “We began reopening a large number of stores in the U.S. in the second week of May and we are tracking slightly above our forecasted recovery curve.” The company also introduced summer menu, which includes an iced guava passion fruit beverage, a grilled chicken and hummus protein box as well as a limited-time unicorn cake pop.

Notably, the company currently has 90% of its stores open in China. The company said that in China, where stores have reopened for a longer period, same store sales are down nearly 20%, which gives an indication that the company is witnessing gradual improvement over the past several weeks. In second-quarter fiscal 2020, China's comparable store sales were down 50% on account of store closures and reduced working hours. Notably, comparable sales from China declined in the quarter after witnessing robust growth in the trailing six quarters.

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 11.2% year to date owing to the pandemic, compared with the industry’s decline of 8.4%. 

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

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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.

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