Starbucks swings to a loss as cafe closures, pandemic costs weigh on profits

A Starbucks Coffee in Harlem is closed, as retail sales suffer record drop during the outbreak of the coronavirus disease (COVID-19) in New York, April 15, 2020.

Bryan Smith | Reuters

Starbucks swung to a loss during its fiscal third quarter as its same-store sales plunged 40% in the wake of the coronavirus pandemic

Shares of the company rose more than 2% in extended trading.

Here’s what the company reported for the quarter ended June 28 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Loss per share: 46 cents, adjusted, vs. 59 cents expected
  • Revenue: $4.22 billion vs. $4.07 billion expected

The global coffee chain reported fiscal third-quarter net loss of $678.4 million, or 58 cents per share, down from net income of $1.37 billion, or $1.12 per share, a year earlier.

Excluding items, Starbucks lost 46 cents per share, narrower than the loss of 59 cents per share expected by analysts surveyed by Refinitiv.

Net sales dropped 38% to $4.22 billion, topping expectations of $4.07 billion. The company estimates that the pandemic resulted in $3.1 billion in lost revenue.

Global same-store sales plummeted 40% during the quarter. Transactions at locations open at least 13 months plunged 51%, but average check increased by 23%. 

As the crisis continues to make it challenging for companies to predict future results, Starbucks revised its fourth-quarter forecast. It now expects to earn between 6 cents to 21 cents, down from its prior forecast, released in June, of 11 cents to 36 cents. But its adjusted earnings during that period are now estimated to be in a range of 18 cents to 33 cents, up from 15 cents to 40 cents. 

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