Starbucks Says Business Is 'Steadily Recovering' As Stores Reopen
Starbucks Corp has said that its business is "steadily recovering" worldwide as most of the coffee chain's stores have reopened with the easing of coronavirus-led restrictions.
Shares of the Seattle-based company rose about 6.5% after it said it would return to profitability in the current quarter on improving sales and margins.
Comparable store sales fell 40% globally and 41% in the Americas during Starbucks' third quarter, which ended on June 28. This was less than analysts' forecast for declines of 42.05% and 42.82%, respectively, according to IBES data from Refinitiv.
Starbucks, like many restaurants and coffee chains, took a big hit from government-imposed measures to curb the pandemic, prompting it to rely more on delivery and drive-through services to make up for lost business.
More people used the chain's drive-through and delivery options to buy coffee and food, with mobile orders rising six percentage points from a year ago to make up 22% of total transactions in the quarter.
Starbucks plans to deploy new handheld point-of-sale devices for employees to take orders in drive-through lines to speed service. It will also roll out curbside pickup and a new plant-based protein box.
"Our recovery strategy is working," said CEO Kevin Johnson said during a call with investors. "We have future-proofed our business model and reinforced our balance sheet to enable us to play offense."
Approximately 97% of global Starbucks-operated locations are now open. This includes 99% of outlets in China and 96% of stores in the United States, which started the quarter with less than half of locations open.
For its full fiscal year, which ends in September, Starbucks expects global same-store sales to be 12%-17% lower. Comparable sales in China should see a substantial recovery by December and US sales expected are to recover by March 2021.
Ninety-day active US members in the Starbucks Rewards loyalty program dropped 5% year-over-year to 16.3 million as customers used it less often because of temporary store closures.
Loss Per Share And Total Net Revenue
Excluding one-time items, the company lost 46 cents per share in the quarter, but that was better than analysts' expectations of a 59 cent per-share loss.
Total net revenue slumped by approximately 38% to $4.22 billion, but still beat the average analyst estimate of $4.07 billion.