Starbucks expects Q2 sales in China to drop by 50% due to COVID-19 disruption
But it assured investors that it is seeing “signs of recovery”.
Starbucks’s business in China is expecting sales in Q2 to decline by 50% due to the disruption caused by COVID-19.
“Although there are near-term financial implications, our long-term, optimistic outlook for the growth potential of Starbucks is undiminished,” the company said in a filing, noting that it would be unable to estimate impact beyond the quarter at this stage.
The coffee giant said it expects a coronavirus-related headwind of as much as US$430 million to China’s revenue this quarter. Early signs of recovery are also emerging as they are seeing sequential improvements in weekly sales.
Starbucks temporarily closed stores in China beginning in late January and reduced operating hours at stores that remained open as a precautionary measure against the spread of COVID-19.
Currently, more than 90% of their stores in China are open but operating “under elevated safety protocols” that include limited lobby service, minimal café seating and leveraging mobile ordering capabilities for contactless service through pickup and delivery.
They also reopened their China headquarters, regional support centers (excluding the Wuhan support center in Hubei province), Farmer Support Center in Yunnan and Starbucks Reserve Roastery in Shanghai.
