Starbucks Corp. swung to a fiscal third-quarter loss as the global coffee house continued to deal with the impact of COVID-19, although executives said the company was seeing a glimmer of light signaling future growth and a path back to profitability.
The Seattle-based company reported that the coronavirus pandemic continued to impact the business during the fiscal quarter ending June 28, which included the worst of the early lockdown periods in the U.S. and Western Europe.
Starbucks reported a loss per share of 46 cents in the fiscal quarter, compared with year-ago earnings of 76 cents.
Revenue fell 38% from the year-ago quarter to $4.2 billion, mainly due to the impact of COVID-19, which forced the closure of indoor dining, web browsing and coffee drinking in locations around the world.
In a quarterly earnings call with securities analysts, CEO Kevin Johnson emphasized that the company was on its way back, but would have to do business in a slightly different way going forward.
“With the vast majority of stores around the world now reopened, we saw meaningful improvements in both sales and profitability as the quarter unfolded,” he told analysts on the call.
Comparable store sales around the world fell 40%, led mainly by a 51% decrease in comparable transactions, however, average ticket prices rose 23% and partially offset the drop in transactions.
About 97% of company-operated stores around the world are open.
The company reported a surge in digital engagement as 3 million customers downloaded the Starbucks mobile app and joined Starbucks Rewards, a 17% increase from a year ago. Starbucks Rewards as a percentage of tender rose 4 percentage points to 46%. Mobile ordering rose to 22% of total transactions, up 6% from year-ago levels.
In the Americas, comparable-store sales fell 40%, led by a 52% drop in comparable transactions, partially offset by a 25% increase in the average ticket price.
The Americas segment reported an operating loss of $404.9 million, compared with earnings of $1 billion a year ago. Revenue in the region fell 40% to $2.8 billion. Much of the impact in the Americas stemmed from catastrophe wages, enhanced wages and expenses for safety supplies.
The company reported gradual increases over time in the Americas, as same-store comp numbers rose from 65% down in mid-April to down only 16% by the end of the quarter in June, Johnson told analysts.
Internationally, comparable-store sales fell 37% in the quarter, driven by a 44% decline in the average ticket price, but slightly offset by a 13% increase in the average ticket price. Comparable store sales were down 19% in China, as comparable transactions fell 27%, which was offset somewhat by a 10% gain in the average ticket price.
The company is forecasting comparable-store sales declines of 12% to 17% for the fiscal fourth quarter and full fiscal year.
Non-GAAP earnings is expected to range from 18 cents to 33 cents a share in the fiscal fourth quarter, while fiscal year earnings will range from 83 cents to 98 cents a share.
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