Starbucks withdraws fiscal 2020 guidance due to coronavirus | Coronavirus/COVID-19
Starbucks Corp. on Wednesday withdrew its guidance for fiscal 2020 on account of the COVID-19 outbreak, according to a shareholder letter from Kevin Johnson, president and CEO, and Patrick Grismer, CFO.
In the letter, the company reported preliminary estimates for Q2 GAAP and non-GAAP earnings per share of approximately $0.28 and $0.32, respectively, reflecting the impact of lost sales for the period as well as incremental expenses for partner wages and benefits, store operations and other activities related to the COVID-19 outbreak. These activities include inventory write-offs, honoring supplier obligations, store safety issues, asset impairments and preliminary estimates of certain government stimulus program benefits.
The company also said it expects to have enough liquidity going forward, noting that it has $3.5 billion in short-term borrowing facilities, including a $1.75 bond issuance on March 10 and a $500 million facility executed on March 20. The company has also suspended share buybacks, reduced discretionary spending and is taking steps to defer capital expenditures.
The company stated in a shareholder letter on March 5 that comparable store sales in China will be down by approximately 50% compared to the prior year.
The company officials said in their Wednesday letter that they expect the negative financial impacts in Q3 to be significantly greater than in Q2 and to extend into Q4, but they also believes the impacts are temporary and the business will fully recover over time.
Topics: Coronavirus / COVID-19