Via Financial Times

Starbucks has laid down plans to have 90 per cent of its company-operated outlets in the US up and running by early June but cautioned it would be far from a return to business as usual for the country’s biggest coffee chain.

As corporate America tries to plot a way out of the coronavirus shutdown, Starbucks said on Tuesday that it would begin reopening stores with reduced operations and opening hours in North America next week. About half of Starbucks’ US stores are currently closed.

Despite the reopenings, Starbucks said it expected the financial pain from coronavirus to intensify in the current quarter after like-for-like sales in the three months to the end of March dropped a tenth and net income slumped by half.

Much of the reduction in the quarter was the result of disruption in China, the company’s second-largest market, where like-for-like sales dropped by half.

However, Starbucks said it expected results in China to “substantially recover” by the end of its financial year. Almost all outlets — apart from those in cinemas and travel hubs — had now reopened in the country, albeit with reduced hours and limited seating.

Starbucks was more cautious about the US. Kevin Johnson, chief executive, said that while the initial hit from the pandemic on Starbucks had been less severe in the US than in China, the company expected the impact “to persist for a longer period of time” in its domestic market.

The reopened US outlets would operate with “modified formats”. Some locations would only operate drive-through, although others would expand their service to include “grab-and-go” or order-ahead services.

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Customer numbers in cafés would be limited and no seating would be provided. Consumers could also order on a mobile app and pick up their order from a barista at the door without entering the café.

Workers were being provided with masks and gloves and their temperatures were being checked before their shifts, Starbucks said.

Mr Johnson expected Canada and Japan, where more than three-quarters of Starbucks’ company-operated outlets remain closed, to follow a similar pattern to the US, with a “very pronounced” hit to results in the current quarter.

Starbucks estimated the pandemic had cost it about $915m in lost revenues in the last quarter and said it expected the impact to be “significantly greater” during the current three-month period.

The company also said it was reducing capital expenditure by about $300m this financial year as it defers café openings and refurbishments.

Starbucks produced net income of $328m in the quarter, equivalent to diluted earnings per share of $0.28, on revenues of $6bn.

Mr Johnson said the crisis would prove temporary and that Starbucks would ultimately emerge in a stronger position. “For over 49 years, since our founding, we have overcome every challenge presented to us,” he said. “And are overcoming this challenge as well.”

Shares in the coffee chain had rallied almost 40 per cent since lows hit last month, driven by hopes of a rebound in China and a gradual reopening in the US. They fell 2 per cent in after-hours trading on Tuesday.