Yahoo Finance Starbucks Provides Business Update Amid Coronavirus Pandemic
Starbucks Corporation SBUX recently provided business update in the light of the coronavirus pandemic. The company is witnessing improvement in comparable store sales in China. However, it anticipates losses in third-quarter fiscal 2020.
Comparable Store Sales
The company is witnessing sales recovery in China from late February. In May, China comps declined 21%, compared with decrease of 32%, 64% and 78% in April, March and February, respectively. Comps in the last week of May fell 14%. The company announced that 99% of its stores in China are open, and out of this 90% have returned to pre-pandemic operating hours. The company is expected to post China comps decline in the range of 20% to 25%, compared with a slump of 50% in fiscal second quarter.
Due to the pandemic, the company had halted store opening program in second-quarter fiscal 2020. However, the company resumed store opening activities at the end of March. In April and May, the company opened 57 net new stores. Despite the coronavirus, the company is on track to open minimum 500 net new stores this fiscal year.
In May, U.S. comps declined 43%, compared with decrease of 63% in April. In the final week of May, comps tumbled by nearly 32%. Currently, more than 95% of the company’s U.S. stores are operational. The company expects to open 300 net new stores in the Americas, down from the prior expectation of 600 net new stores. However, over the next 18 months, the company will close up to 400 company-owned stores in the United States and Canada. The company expects comparable store sales for the Americas and the U.S. in fiscal third quarter 2020 to decrease 40% to 45%, and then improve to a decline of 10% to 20% in the fourth quarter.
Earnings to Decline Sharply in Q3
Due to the pandemic, the company expects sharp losses in third-quarter fiscal 2020. The company anticipates GAAP and non-GAAP loss per share for third-quarter fiscal 2020 in the range of nearly 64-79 cents and 55-70 cents, respectively.
In the past three months, shares of this Zacks Rank #3 (Hold) company has gained 27.3%, compared with the industry’s rally of 24.9%.
Stocks to Consider
Some better-ranked stocks in the same space includes Cracker Barrel Old Country Store, Inc. CBRL, Domino's Pizza, Inc. DPZ and Papa John's International, Inc. PZZA. Al these stocks have the Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past one month, shares of Cracker Barrel have gained 40.3%.
Domino's and Papa John's have an impressive long-term earnings growth rate of 12.8% and 8%, respectively.
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Dominos Pizza Inc (DPZ) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
Papa Johns International, Inc. (PZZA) : Free Stock Analysis Report
Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
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