Starbucks swung to a loss on Tuesday as the coffee chain reported a 40% decrease in global same-store sales driven by a 51% drop in traffic during a challenging Q3 ended June 28 marred by the astronomical effects of the COVID-19 pandemic. The disappointing quarter — accentuated by café closures and a significant decrease in daily commuters — was offset by a 23% increase in ticket growth.
U.S. same-store sales were down 41% with a 53% decrease in traffic, while international sales were down 37%, driven by a 44% decline in traffic.
“Starbucks partners have risen to the occasion, and our near-term focus is to recover sales safely and responsibly by offering our customers the comfort and care that differentiate the Starbucks Experience,” Starbucks president and CEO Kevin Johnson said in a statement. “We are pleased to share that the vast majority of Starbucks stores around the world have reopened and our global business is steadily recovering, demonstrating the relevance of the Starbucks brand and the trust we have built with our customers.”
Despite challenges, the coffee chain’s road to recovery has been a long time in the making. Starbucks reopened more than 90% of its U.S. stores by June, adding new features to make the transition to “the new normal” easier for customers, including curbside pickup and entryway handoff options at select locations. Despite the accelerated reopening plan, Starbucks began asking landlords for rent relief through 2021 “to support modified operations and adjustments to lease terms and base rent structures” as the chain was challenged to adjust to a new normal.
In their last business update in June, Starbuck announced that they would be closing 400 U.S. stores in their pivot to an express store portfolio and cautioned investors of their ongoing financial struggles, and updated their guidance in this quarter's earnings call to reflect their anticipation that China same-store sales would substaintially recover by the end of 2020, while U.S. same-store sales are expected to be down 12-17% in Q4 with “substaintial recovery” by Q2 2021.
Starbucks revenues for the third quarter decreased 38% to $4.2 billion as compared with $6.8 billion the year prior. The company reported a net income loss of $678.4 million, or 58 cents per share, down 149% from a net income of $1.37 billion, or $1.12 per share the same quarter the year prior.
Starbucks opened a net 130 new stores in Q3, and as of June 28, had 32,180 stores globally.
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