Starbucks Corp said it expects current-quarter operating income to plunge by up to $2.2 billion, and sales to decline for the rest of the year even as nearly all its cafes have reopened following easing of coronavirus lockdowns.
The company said it would permanently close about 400 stores in the Americas over the next 18 months and cut its planned new store openings by half to about 300 this fiscal year, signifying the lasting impact of the pandemic.
The world's largest coffee chain's shares fell nearly 4%, as it also forecast a bigger-than-expected current-quarter loss and an over $3 billion fall in revenue.
Impact Of Pandemic
With the COVID-19 pandemic effectively putting a stop to dining out in most of the United States for weeks, Starbucks was forced to convert its cafes to pick-up or drive-through joints only.
The company said it would now speed up the opening of pick-up only stores, especially in urban areas, as health experts advise people to stick with social-distancing norms.
Starbucks projected an adjusted loss of about 55 cents to 70 cents per share for its third quarter ending in June, and said it expects US same-store sales to drop by up to 45%.
Analysts were expecting a third-quarter loss of 16 cents per share, according to IBES data from Refinitiv.
However, declines are expected to slow towards the end of the year.
The company expects same-store sales in China to drop by 20% to 25%, slightly more optimistic than an earlier forecast of 25% to 35% fall.
Starbucks said it expects current quarter operating income decline between $2 billion to $2.2 billion. It reported an operating income of $1.07 billion in the third quarter of last year.