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Mar 29, 2020
Starbucks Q2 2020 Earnings Report
Starbucks Q2 2020 financial results reported a decline in revenue and earnings due to the adverse impact of COVID-19, but highlighted a substantial recovery in China.
Key Takeaways
Starbucks Q2 fiscal 2020 results were negatively impacted by the COVID-19 pandemic, with a 5% decrease in consolidated net revenues to $6.0 billion and a 47% decrease in GAAP EPS to $0.28. Global comparable store sales declined by 10%, driven by a decrease in comparable transactions. However, the company saw steady business improvement in China, with substantially all stores reopened and customer engagement growing.
Global comparable store sales declined 10%, impacted by a 13% decrease in comparable transactions, but partially offset by a 4% increase in average ticket.
Consolidated net revenues decreased 5% year-over-year to $6.0 billion due to lost sales related to the COVID-19 outbreak.
GAAP operating margin contracted 550 basis points year-over-year to 8.1%, primarily due to sales deleverage and additional costs incurred in response to the COVID-19 outbreak.
Starbucks Rewards loyalty program grew to 19.4 million active members in the U.S., up 15% year-over-year.
Starbucks
Starbucks
Starbucks Revenue by Segment
Starbucks Revenue by Geographic Location
Revenue by Segment
Company-operated Revenue
CapyFin.comLicensed stores Revenue
CapyFin.comOther Revenue
CapyFin.comRevenue by Geographic Location
North America Revenue
CapyFin.comInternational Revenue
CapyFin.comChannel Dev. Revenue
CapyFin.comCorporate/Other Revenue
CapyFin.com Forward Guidance
Due to the dynamic nature of the COVID-19 outbreak and its impact on the business globally, total company guidance for fiscal 2020 will remain suspended, except for selected metrics. The negative financial impacts of COVID-19 are expected to be significantly greater in Q3 FY20 compared to Q2 FY20, and to extend into Q4 FY20 but at a more moderate level.
Positive Outlook
- China's sales are expected to substantially recover with comparable store sales roughly flat to prior year levels at the end of fiscal year 2020.
- At least 500 net new stores in China
- Based on substantial experience in China to date, the impacts of the COVID-19 outbreak are temporary and the business will fully recover over time.
- Channel Development GAAP revenue decline of 6% to 8% with modest operating margin improvement
- The company will continue to provide transparent updates as it gains visibility to performance trends, as well as the steps it is taking to position the company for full recovery.
Challenges Ahead
- Approximately 50% of company-operated stores in the U.S. are temporarily closed.
- More than 75% of stores in Canada, Japan, and the United Kingdom are temporarily closed.
- Approximately 50% of the global licensed store portfolio is also closed
- The company is currently unable to estimate full company financial impacts with reasonable accuracy.
- The negative financial impacts of COVID-19 are expected to be significantly greater in Q3 FY20 compared to Q2 FY20, and to extend into Q4 FY20 but at a more moderate level.
Revenue & Expenses
Visualization of income flow from segment revenue to net income