Global sales fall at Starbucks as Covid-19 forces store closures

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Starbucks saw its global sales tumble in the first three months of 2020 as coronavirus-related shutdowns hampered its operations.

The Seattle-based coffee giant said conditions will likely worsen in the current quarter before levelling out later this summer, adding recovery will extend into 2021.

However, executives said they are seeing encouraging signs.

The company’s president told a conference call of investors: “I think we emerge from this strengthening the brand and strengthening the connection we have with customers.”

More than 75% of its stores in Japan, the UK and Canada are closed, but 98% of stores in China have reopened, albeit with reduced opening hours and seating.

Mr Johnson said Starbucks is predicting a “substantial recovery” in China, its second-largest market, by September 30, when its fiscal year ends.

In the US, Starbucks has temporarily closed half its 8,000 company-owned stores, and is planning to reopen 90% of them with modifications by early June.

Some locations will offer drive-through and delivery, while others will establish contactless pickup options, chief operating officer Roz Brewer said.

Thirty stores reopening next week will have their cafes open, but seating will not be provided, Ms Brewer said.

She said Starbucks will consider local government restrictions, infection curves and other measures as it reopens stores.

Starbucks has spent heavily to help employees navigate the crisis.

The company has committed to paying all US and Canadian employees up until May 3 whether they are working or not, and those who do come to work are making a premium of 3 dollars (£2.40) per hour.

Starbucks has also provided a million free coffees to frontline health and safety workers.

The company’s revenue fell 5% to 6 billion dollars (£4.8 billion) in its fiscal second quarter, beating analysts’ estimates of 5.9 billion dollars (£4.7 billion), according to FactSet.

The company earned 328.4 million dollars (£265 million) for the quarter, down 50.5% from the prior year.

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