SBUX Starbucks Corporation

By Heather Haddon 

Starbucks Corp. said global same-store sales dropped 10% in the first quarter as a result of the coronavirus crisis, the first downturn by that measure in nearly 11 years.

The coffee giant said Tuesday that it expects the impact of the pandemic to be even larger in its current quarter, and to continue to depress its business to a lesser extent later in the year. The Seattle-based company said it expects the virus's impact to be temporary and that its business will eventually recover.

Starbucks has taken some of the strongest measures among restaurant companies to safeguard workers and customers in response to the virus. It was one of the first national chains to restrict dine-in service, eventually shifting nearly all of its sales to drive-through and delivery. It has paid workers at company-owned stores to quarantine and compensated employees who chose to stay home for 30 days rather than work.

Those measures have come at a cost. Starbucks's earnings per share adjusted for unforeseen expenses, including the added worker pay, came to 32 cents a share. Analysts polled by FactSet had expected adjusted earnings of 34 cents a share.

The company's shares declined 1% to $78.

Roughly 50% of Starbucks's company-owned stores in the U.S. are closed. The others have continued with drive-through and delivery sales. Starbucks has said it won't open dine-in service at U.S. cafes soon, relying on drive-through, delivery and pickup sales for now. The chain plans to begin reopening closed stores with the modified service on May 4. Starbucks has said it will continue to pay workers an extra $3 an hour through the end of May.

The company's China business has felt the virus's impact since January, with same-store sales declining 90% at the peak of the outbreak there, in mid-February. Starbucks said last month that it would suspend work to open new stores in its second biggest market for now. Nearly 100% of its stores in China are now running with limited hours and modified service

The same-store sales decline put an end to 41 consecutive quarters of global growth for Starbucks. Starbucks's sales in stores open for at least 13 months last declined in 2009 during the recession.

The company reported earnings per share of 28 cents on $328 million in profit. Global sales for the second-quarter ending in March came to $6 billion, down 5% from the year before. Analysts had expected $5.9 billion in sales and an 8.5% drop in same-store sales.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

April 28, 2020 16:45 ET (20:45 GMT)

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