Starbucks pulls back on guidance increase as China outbreak forces store closures
Starbucks Corp. reported fiscal first-quarter earnings that beat expectations, however, warned that the ongoing coronavirus spread in China is forcing it to temporarily shut down a couple thousand locations in the region and is delaying a planned upgrade in earnings guidance for the future.
The global coffee store chain reported non-GAAP earnings per share of 79 cents a share in the quarter, representing a 16% year-over-year increase, which beat the company’s own internal estimates and Wall Street consensus estimates.
Global comparable store sales rose 5%, driven by a 3% gain in average ticket sales and a 2% increase in comparable transactions. In the U.S., comparable store sales were up 6%, with comp transactions up 3%.
“Given the strength of our Q1 results, we had intended to raise certain aspects of our full-year financial outlook for fiscal 2020,” President and CEO Kevin Johnson told analysts on a quarterly investor call late Tuesday. “However, due to the dynamic situation unfolding with coronavirus, we are not revising guidance at this time.”
Starbucks has already closed half its stores in China, where it has more than 4,000 locations, and is revising the hours of its remaining stores in the country due to the ongoing virus outbreak, according to officials. It’s continuing to deliver from stores that remain open, however, company officials said on the call.
Johnson said the company would update investors on the situation once it had more guidance on the situation on the ground.
China has been the lead international growth market for Starbucks and the chain reported 3% comparable sales growth in the quarter and 1% comparable transaction growth.
Starbucks Rewards loyalty members grew to 18.9 million in the U.S., up 16% year-over-year and the strongest growth in three years.
Consolidated net revenue grew 7% in the quarter to $7.1 billion, in the quarter.
Cover image: Starbucks