Starbucks Predicts Worse-Than-Expected Profit Drop in Second Quarter

What’s new: American coffee giant Starbucks Corp. said it predicted a year-on-year slump in revenue and profit worth billions of dollars in the second quarter of 2020, even after more than 90% of its stores in the U.S. and in China have reopened.

The Seattle-headquartered company’s revenue from April to June this year is likely to be down $3 billion to $3.2 billion, while operating profit in this quarter is expected to drop by around $2 billion to $2.2 billion, according to a company statement issued Wednesday. That will make for a loss of 55 to 70 U.S. cents per share, according to its earnings forecast, far more than analysts’ earlier estimates.

Background: Starbucks suspended business in more than half of its Chinese mainland stores in late January due to the Covid-19 outbreak. Its stores in China started reopening in late February, and most are now open.

The company’s home market however continued to take hit as the pandemic shifted to the U.S. American stores started reopening in the second week of May, and 91% of them have resumed business as of the end of that month, albeit with significantly shorter business hours than before the pandemic, Starbucks said.

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Related: Starbucks Raises Bet on China Despite Coronavirus Blow

Contact reporter Isabelle Li (liyi@caixin.com)