starbucks earnings q2 2020

In Q2, this segment's revenue grew by 16%, which includes a 5% favorable impact primarily related to the Global Coffee Alliance transition-related activity, boosting our share of the coffee market outside of specialty retail. That said, there's -- the economic implications following this are sort of yet to be determined. But given the late quarter onset of COVID-19 impacts in the US as well as a materially higher flow-through rate on lost sales in the US, we do expect the negative financial impacts of COVID-19 to be significantly greater in Q3 compared to Q2, and to extend into Q4. So we're encouraged by that. Starbucks said Tuesday it expects its fiscal third-quarter results to show steeper declines from the pandemic, given that social-distancing measures and shelter-at-home orders went into place in the U.S. near the end of March. From our perspective, the reopening of stores and actions we are taking to position ourselves when the crisis subsides, do not fully define recovery. Your next question comes from the line of Andrew Charles with Cowen. Partners are the key to our resilience. In terms of food sourcing, there's a lot of activity happening in proteins. Chris, just real quick on China. Roz, why don't I have you respond as it relates to digital and US and safety protocols? Thank you, Kevin, and good afternoon, everyone. We estimate the COVID-19 impact to be approximately $0.45, including not only profit flow-through on the revenue impact that I noted earlier, but also incremental costs that we incurred in response to the pandemic, which I will outline later. Obviously, that's a higher number than a lot of your peers, and that would suggest that those stores or those locations are somewhat hamstrung during the COVID situation of being locked down. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Sales in China have improved as the company reopens cafes. Today, approximately 50% of our company-operated stores and 46% of our licensed stores in the US are temporarily closed. As Starbucks really does differentiate itself with the cafe experience and the third place experience. She also asked about the marketing piece around the US business. What they look for, what consumer sentiment looks for is something that is safe, experiences that are safe, familiar and convenient. You'd suggested that 50% of the stores that we closed were hampered for some reason. Consistent with the approach we have taken in our two interim update this quarter, we will provide transparent updates as to what we are seeing and how that shapes our perspective on the balance-of-year financial results as we execute our store reopening plan and have increased visibility into business performance trends in the US and other markets. On to Channel Development. Baird. And Yum China this afternoon said the same quarter, their comps are down roughly 10% thus far. Our belief is that these impacts are temporary as evidenced by our continued recovery in China, as Kevin outlined, so I will highlight the financial impacts to provide investors with perspective on our normalized performance for the second quarter as well as insight into how future quarters' results may be affected by these conditions. Stock Advisor launched in February of 2002. And so we are seeing people come back into the cafes and sit there, albeit not to the levels that we saw pre-COVID. My question is on how you think about the pace of the US recovery, in addition, obviously, to the pandemic, or in a recession. I'm just wondering if it will be easier to recover sales in one country more so than the other because of either the approach the country is taking to reopening or maybe because of just differences in consumer behavior. Finally, for your calendar planning purposes, please note that our third quarter fiscal year 2020 earnings conference call has been tentatively scheduled for Tuesday, J uly 28, 2020. But given the amount of coffee that is imported, and Latin America is a little bit earlier stages with COVID-19 relative to the US. On behalf of Starbucks, I want to extend our deepest compassion and empathy for all of those impacted by loss of life, feelings of anxiety and isolation, and fears of both health and economic uncertainty during this pandemic. Starbucks Corp (SBUX) Q2 2020 Earnings Call Transcript SBUX earnings call for the period ending March 29, 2020. I am proud of how Starbucks partners in the US have shone up through all of this. After all, partners are the heartbeat of Starbucks. We are confident that our brand is resilient and that our customers are eager to resume their daily routines. We also were very well connected into the local health officials as well. U.S. same-store sales fell 3% during the quarter, while Chinese same-store sales plunged 50% in the same period. Your next question comes from the line of Katherine Fogertey with Goldman Sachs. To date, in April, comparable sales growth for US company-operated stores that are open is averaging approximately minus 25% or indexing at 75% of prior-year levels. The strength of our digital reach combined with a range of service options is enabling us to reopen stores community by community, in a thoughtful way using the three simple principles that have guided our response thus far. Similar to our experience in China, we are transitioning into a new phase of operations we call monitor and adapt. And in those 30 stores, there'll be no seating. Given this progress, we believe our recovery plan is working and we remain optimistic about our ability to capitalize on the long-term growth potential of the premium coffee market in China. I'm very proud of how Starbucks partners have shown up in every part of the world, and we will continue to be focused, disciplined and transparent with all stakeholders as we continue to navigate this situation. Through the Global Coffee Alliance with Nestle and our ready-to-drink partners, including Pepsi and Tingyi, we offer a wide range of Starbucks products down the aisle in grocery stores, at mass merchants and convenience stores, and online. We continue to see digital being a key element of our strategy in China, and really, the adoption of the digital transactions in our stores continues to accelerate. We now have it down in Shenzhen as well as in Beijing. Have you thought about like the product lineup differently now because of the situation? I'd say both in the US and China, we're in the strongest competitive position that we've been in, in the history of the company. And John, last word on China? Yeah, Dennis, this is Kevin. We expect to provide our next update in June after we've evaluated the performance of stores we opened in the US and better understand the possible duration of temporary closures in Japan. In fact, you were very specific on the China path. SEATTLE – Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal second quarter ended March 29, 2020. What do you think is driving the lag in your recovery versus a peer like this just based on your knowledge of the market? But based on what we see today, including our expectation that sales will start to recover as we come out of the third quarter into the fourth quarter into next year, I would say at this stage, we would expect capex to normalize in fiscal 2021. Unsurprisingly, business disruption attributable to the COVID-19 pandemic has materially impacted our financial results. Through the month of February, Americas non-GAAP operating margin improved meaningfully versus the prior year, reflecting strong sales leverage and continued supply chain efficiencies. Now moving on to our outlook for fiscal 2020. What we see today is that in the stores that we have open, we have roughly 83% of those stores have seating in them with social distancing in place. The company plans to add curbside pickup later this summer, COO Roz Brewer said. Excluding items, Starbucks earned 32 cents per share, down nearly half from the prior year. And as a matter of fact, since we've begun and gotten to the 98% of stores reopened, our customer experience scores has actually increased by over 8 points pre-COVID levels. So the acceleration of these new models that we opened, we're going to talk about them pretty broadly and loudly, and we'll know more over the next 30 days. So very proud of the work that they've done and just want to recognize the China team for what they've done to navigate this complex situation. First, through salary and wage continuation and through premium pay for those working on the front lines of our business, both as communicated through the end of May, we are investing in our partners who are critical to the Starbucks Experience and instrumental to our long-term success. Starbucks® Rewards loyalty program grew to 19.4 million active members in the U.S., up 15% year-over-year. Our innovation in food, notably, our new breakfast wraps, have surpassed expectations to date. Thank you. So that's what drove the decision to close all those stores, whereas certainly others made different decisions, and that's fine. Through the first 10 weeks of the quarter, the US delivered 8% comparable store sales growth, building on strong momentum from the past few quarters. They're performing well. Starbucks Corp (NASDAQ:SBUX)Q2 2020 Earnings CallApr 28, 2020, 5:00 p.m. While we temporarily paused new store openings in China in Q2 given COVID-19, development activities resumed toward the end of the quarter, and we are on track to open at least 500 net new stores this fiscal year or over 80% of our original target. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information. As we have in recent weeks reopened some more of our drive-through stores, we've seen slight improvement within that range so that we're closer to the minus 60 end of that range. We believe the focused actions we are taking to deliver a contactless customer experience, coupled with continued beverage innovation and expanded digital capabilities, will help to restore the upward momentum in our US business that we were experiencing prior to the onset of COVID-19. We're going to leverage that to communicate with our customers. And then we will actually have every partner take their temperature and then validate if they're ready to work through a series of questions. Contents: Prepared Remarks; Questions and Answers; Call Participants; Prepared Remarks: Operator. But I think Roz captured it quite well. However, near the end of the quarter, the pandemic started to materially impact our business outside of China, most significantly in the US. Earnings per share: 32 cents, adjusted; Revenue: $6 billion The coffee chain reported fiscal second-quarter net income of $328.4 million, or 28 cents per share, down from $663.2 million, or 53 cents per share, a year earlier. Great. See you at the top! Thank you, Sara, for the questions. We expect our leverage to return to near three times rent-adjusted EBITDA in the latter part of fiscal 2021. To summarize, the financial impacts of COVID-19 are very material and will weigh on our Q3 performance in particular. So a couple of things I'll comment on. We remain confident in our approach. It is why we will do all we can to provide them with economic certainty and support them through this challenging period. And a lot of that comes through the focus and discipline that we had going into COVID as well as the principal way we have decided every action we've taken to navigate the COVID virus responsibly and thoughtfully, prioritizing the health and well-being of our partners and our customers, the engagement partnership we've had with government and health officials to help contain -- and mitigate and contain the spread of the virus, and the fact that we are showing up in a positive and responsible way in every community that we're part of. Yeah. Cumulative Growth of a $10,000 Investment in Stock Advisor, Starbucks Corp (SBUX) Q2 2020 Earnings Call Transcript @themotleyfool #stocks $SBUX, If You Put $1000 Into Starbucks Stock Last January, Here's How Much You'd Have Now, Starbucks Casually Lays Out a Plan to Dethrone McDonald's, Copyright, Trademark and Patent Information. Matt, this is Kevin. These forecasts were created prior to the spread of the virus, were based on information available at the time and on a variety of assumptions, which we believe were reasonable, but some or all of which may prove not to be accurate. Chris, thank you for that question. The routines may look a little bit different, but they will -- people remain in a work from home position. Starbucks (SBUX) second-quarter fiscal 2020 results hurt by decline in traffic and store closures due to the coronavirus. And that remains the powerful combination for us to continue to engage and drive frequency of customer visits. Let's conquer your financial goals together...faster. While current margin performance is obviously highly distorted by large levels of store closures and interim store partner pay practices, so talking about the value of incremental comp growth or incremental margin improvement is somewhat irrelevant, I would say, at this juncture. Q2 Americas Segment Results We are expecting to open at least 500 net new stores in fiscal 2020 with as many as 100 new stores, originally planned for this year deferred to fiscal 2021. When we look at consumer behavior on a global basis as it relates to COVID-19, after people have been sheltering at home in a lockdown situation for several weeks -- China, it was a little over three weeks. These items are excluded from our non-GAAP results. I hope everyone is doing well. Starbucks SBUX is set to report its Q2 fiscal 2020 financial results on Tuesday, April 28, as earnings season continues to ramp up and put a spotlight on the coronavirus economic impact. Andrew, a couple of things on our roasting capacity. We're seeing sequential improvements in overall weekly active members. The company also warned that its fiscal third-quarter results will take an even bigger hit from the pandemic, even as sales in China begin to recover. Based on the experience we gained navigating COVID-19 in China, we have been as well prepared as anyone for this mitigate and contain phase in the US, particularly as our stores are well positioned to adopt operational safety protocols while still meeting our customers' needs. Q2 Earnings Reveals an Ugly Consumer Economy for Starbucks Competition and belt-tightening could hurt SBUX stock By Josh Enomoto , InvestorPlace Contributor May 1, 2020, 1:59 pm EDT May 1, 2020 I am proud of how Starbucks China continues to pave the way as one of our two lead growth markets. And relatedly, how much do you think social distancing in these walk-in stores will limit your capacity when they do reopen? Today, continued recovery in China strengthens our belief that these impacts are temporary, and that we will emerge from this global pandemic with new insights and capabilities that will make our business even stronger and more relevant. By. Thanks. But we had a network of coffee built into the system. And with the rest of restaurants -- most of them are showing week-on-week improvement. Thank you, Katherine. Thank you. Our performance was interrupted mid-March when a national emergency was declared to mitigate COVID-19. So we'll learn those patterns through the month of May and be able to come back to you, as Pat described, in early June. We are well positioned to leverage our digital assets and new operating formats like contactless pickup and curbside to expand service to customers. We have the financial strength to make investments for the long term as we navigate challenges in the short term. And we're going to be thoughtful and responsible with each step that we take, and I think that's the formula. And then I guess, thirdly, at what point would you feel comfortable as the CFO ramping back up the capital spending with respect to growth and other discretionary capex? These forecasts were developed based on the most recent prevailing trends in revenue and profitability prior to the onset of material COVID-19-related business impacts, specific to each operating segment and market. Q1 2020 Earnings Conference Call. We've seen that in China. Starbucks (SBUX) Q2 2020 earnings: Same-store sales fall 10% April 28, 2020 Sam khawaja 0 Comments Starbucks on Tuesday said that its fiscal second-quarter global same-store sales fell 10% as the coronavirus hit sales in its two largest markets, the United States and China. So we're going to learn as we go as -- Kevin calls it monitor and adapt. Starbucks is withdrawing its 2020 outlook as it faces an estimated 46 percent earnings drop for the second quarter, according to multiple reports.. But John, since you manage the coffee piece, on green coffee -- sourcing of green coffee, why don't you talk a little bit about that? This is the beginning of the recovery as we reopen stores beginning in early May, and we expect to have approximately 90% of all company-operated US Starbucks stores reopened by early June with enhanced safety protocols and modified schedules. Starbucks Corporation - Starbucks Reports Q2 Fiscal 2020 Results. Non-GAAP EPS of $0.32, down 47% from the prior year ; Starbucks® Rewards loyalty program grew to 19.4 million active members in the U.S., up 15% year-over-year ; Q2 Americas Segment Results It'd be helpful to know what you're seeing with engagement as we've gone through this month? Thank you. So it's really driven by the fact that it was just drive-through only. The Global Coffee Alliance with Nestle was established just 20 months ago. So while the initial impacts in the US are less severe than they were in China, from a comparable store perspective, owing to the prevalence of our drive-through model in the US, we do expect the impacts to persist for a longer period of time as we move through the monitor-and-adapt phase with the recovery phase extending into fiscal 2021. Your next question comes from the line of Brian Bittner with Oppenheimer. This monitor and adapt phase in the US is the inflection point for reopening stores and begin the recovery process that requires ongoing monitoring community by community, to rapidly adapt and drive the recovery. That said, our near-term focus clearly is on reopening our stores and optimizing their profitability as we emerge from the crisis and learn more about underlying customer traffic patterns and trends. For the second quarter, Starbucks produced consolidated revenue of $6 billion, down 5% from the prior year. Q2 Americas Segment Results Could you describe the primary differences in maybe the approach to reopening in the US compared to China? In the US, almost 60% of our company-operated stores include drive-through and over 80% of our customer occasions before the crisis were on the go, with the majority of these orders being placed at the drive-through or by using the Starbucks app to mobile order for pickup or delivery. And we're on a path where we are going to hit the 500 stores by the end of this year, and we are going to continue to accelerate. So as you drill down, there's probably some of those stores that are doing better, and we're seeing it migrate. Yeah. And I believe, if anything, the way we've navigated the virus continues to put us in a very strong position competitively. Roz, why don't you share a little bit more about the plans that you see unfolding over the next 30 days? But it's still early for us for delivery overall. Starbucks Earnings: SBUX Stock Falls 2% Following Q2 EPS Miss SBUX missed EPS estimates by 2 cents By William White , InvestorPlace Writer Apr 28, 2020, 4:42 pm EST April 28, 2020 And so what we've seen as we've opened up, first off, our partners, similar to the US, we're very excited to get back into stores. Starbucks assumes no obligation to update any of these forward-looking statements or information. And as you reopen stores in the US, do you have any sense of how much of those volumes in the stores that remained open might have represented sales transfer from closed stores? We believe, barring any new disruptions, that our business in China is on a path to substantial recovery by the end of this fiscal year. Hi, good afternoon. I think we're very optimistic about our competitive position, and we just have to -- we'll be a lot smarter 30 days from now after we get to see the reaction of the reopening in the United States. GAAP results in fiscal 2020 and fiscal 2019 include items which are excluded from non-GAAP results. The strategic value of our Channel Development segment has been clearly evident in the current environment. Starbucks posted a 51% dip in earnings for the second quarter of 2020 as the adverse impact of COVID-19 hurt the top-line by 5%. Can you talk about the visibility you have into securing the supply of coffee, and to a lesser degree, pork for breakfast sandwiches? Share; Tweet. I … About half of Starbucks' U.S. company-operated locations are closed. We have followed local mandates for closure. Areas that will be slower, similar in China. For the quarter, International's revenue declined by $395 million or 26% versus the prior year to $1.1 billion primarily driven by a 31% decrease in comparable store sales, partially offset by 11% net new store growth over the past 12 months. The company is preparing to start reopening U.S. cafes next week as some U.S. states report that the number of new coronavirus cases has plateaued or even declined. And it's at approximately $125 million per week after capex but before our dividends. Today's discussion will be led by Kevin Johnson, President and CEO, and Pat Grismer, CFO. Pat, a question for you in terms of the outlook, at least for the second half. We will spend within our existing plans for this year, just convince them and accelerate most of the work around enabling our app and encouraging people to use the app and order ahead. We are optimistic about the future, and we believe Starbucks will emerge from this experience even stronger, more determined and more focused than ever before. Let me just comment on the part of your question, then I'll hand it over to Pat. This conference call will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. We'll have paid social, owned, earned media. We feel very good with our positions on green coffee inventories and how we're positioned in the marketplace. We are having ongoing conversations with our landlords in various markets regarding what may be commercially reasonable lease concessions in the current environment. Q2 Fiscal 2020 Starbucks Earnings Conference Call April 28, 2020 02:00 PM PDT Earnings Release (opens in new window) PDF 756 KB Transcript (opens in new window) PDF 337 KB Third, through certain accelerated payments, we are helping strategic suppliers weather this crisis so that they can sustain the supply of our proprietary products and support our ongoing product innovation. We understand there's much more to do and that we must be agile as the world navigates COVID-19 and works to create a vaccine. The company estimates that it lost $915 million in sales during the quarter due to store closures, reduced operating hours and lower customer traffic resulting from the pandemic. The coffee chain reported fiscal second-quarter net income of $328.4 million, or 28 cents per share, down from $663.2 million, or 53 cents per share, a year earlier. This campaign is just one step in our larger aspiration to be planet positive, while introducing relevant menu choices for customers. Today, almost 100% of our stores in China are open, many with limited seating, reduced hours and other safety protocols in place. Together, we are emotionally connected to a mission grounded in humanity. Q2 2020 Starbucks Corp Earnings Call 04/28/2020 05:00 PM (EDT) SBUX. We estimate the COVID-19 impact to be approximately $915 million due to temporary store closures, restricted sales channels, shortened operating hours and severely reduced customer traffic. I'd like to start by echoing Kevin's appreciation for all of our Starbucks partners who continue to demonstrate their dedication to Starbucks and their communities in spite of hardships facing the global community right now. And so the opening of stores was over a longer period of time than I think we're going to see in the US, but it was orchestrated city-by-city and almost community-by-community centrally. The cash flow implications of these near-term operating results are very material. Number two, we also see digital continuing to play a bigger role, and in particular MOP and MOD, and we're going to continue to leverage that. So those 30 million that you're -- that we can reach, we will do that in the next week. And then I think we anticipate that the mall stores will also be slower and that mall stores are less than -- fewer than 8%, I think, of the total store fleet in the US. So we're very encouraged with the opportunity in digital. And so I think that's an important point. Now you asked about our dividend. So really making sure that we created a safe environment and that we continue to build on the trust that our brand has with our customers and obviously with our partners. John Culver -- Group President, International, Channel Development and Global Coffee & Tea. Sharon, you had a second part of that question. You'll see later in the summer, we'll also add curbside access to our stores. Finally, for your calendar planning purposes, please note that our third quarter fiscal year 2020 earnings conference call has been tentatively scheduled for Tuesday, July 28, 2020. Our channels business has demonstrated resilience through all of this. So how do you think about incenting customers to come back differently? Our US business is entering the phase of reopening stores, adapting to the new reality and restoring and rebuilding momentum. And we will continue our practice of providing updates to the investment community when we have better visibility to them. We're enforcing to download the app and pick up and order ahead. Starbucks is resilient. What we've been able to do is leverage our Starbucks Rewards membership to really maintain that connection and engagement during the COVID experience. We had a peak in early February of 80% early on. When normalizing for the 5% favorable impact of Global Coffee Alliance transition-related items, Channel Development's revenue grew 11% in Q2 over the prior year. For the month of April, comparable store sales in China were down approximately 35% marking strong improvement from a weekly low of minus 90% in mid-February. And clearly, the posting an 8% comp with 4 points of transaction growth in the US in the first -- up until the last two weeks of March, was clearly an indication that, I think this combination of the in-store experience, beverage innovation and digital customer relationships was putting us in a position where we were, I think, growing share of the customer occasions at specialty coffee retail. And so I think our competitive position is very strong. But I think there'll be a little bit of a difference in terms of -- in the US deciding -- we'll open them faster, but we'll decide geography by geography what's the appropriate format. You guys are somewhat insulated from protein challenges and shortages that are starting to surface. I will now turn the call over to Durga Doraisamy, Vice President of Investor Relations. Thanks. And so as we reopen the stores, we're reopening in a safe environment, which is why these new modes of pick up and go, we're really enforcing. Please proceed with your question. And our focus on the customer experience, beverage innovation and digital differentiate Starbucks and will enable us to regain the momentum we had prior to COVID-19. We've got to keep -- stay focused on the things that matter. Have kind of ramped as you 've gone through April with R.W the.. Respect to sort of systemwide sales will look like % growth, US... Delivery space as well with Barclays remains the powerful combination for US to successfully navigate this challenge exploring! And drive frequency of customer visits seattle – Starbucks Corporation ( NASDAQ: SBUX ) today reported financial for... 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