Starbucks is expecting significantly lower sales in its Chinese stores in the second quarter because of coronavirus. Now, it estimates a 50% decline, and a hit of between $400 million to $430 million to its revenue in China vs. earlier expectations.
In February, sales at stores open at least 13 months in China dropped 78% compared to the prior year because of temporary store closures, reduced hours of operation and a sharp decline in customer traffic, CEO Kevin Johnson and CFO Patrick Grismer noted in a letter to stakeholders Thursday. The disruption means that Starbucks has had to significantly adjust its second-quarter outlook in China. Before the outbreak, the company expected sales at stores open at least 13 months to jump by 3%.
The company expects 95% of stores to be open by the end of the second quarter, but with this type of limited service. Starbucks is taking other measures to help curtail the spread of the virus, which has sickened more than 95,000 and killed over 3,300 people worldwide. Most victims are in China, where the outbreak originated. Employees wear masks, and undergo temperature checks daily. They also avoid touching customers by using"contactless" service.
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