Starbucks Sales Down 5%... China Sees First Growth Since COVID-19

[Asia Economy Reporter Yujin Cho] Starbucks has not been able to escape the quarterly sales decline trend due to the impact of the novel coronavirus disease (COVID-19).

On the 26th (local time), Starbucks announced that its sales for the first fiscal quarter of 2021 (October to December 2020) recorded $6.75 billion, a 5% decrease compared to the same period last year. This figure fell short of market expectations ($6.93 billion). Earnings per share (EPS) were 61 cents, showing a decline from 79 cents in the same period last year, but slightly exceeded the market forecast of 55 cents.

Due to business suspensions caused by COVID-19 lockdown measures, same-store sales in the United States decreased by 5%, whereas same-store sales in China increased by 6%.

The company explained, "The decrease in U.S. store sales was due to reduced customer traffic caused by the impact of COVID-19, temporary store closures, shortened operating hours, and changes in operating policies."

Bloomberg analyzed that the solid performance in the Chinese market, the second largest market after the U.S., indicates that the worst period has passed. This quarter marks the first time since the COVID-19 outbreak that sales in China showed growth.

During this period, the operating margin was 13.5%, deteriorating compared to 17.2% in the same period last year due to the impact of the COVID-19 pandemic and costs related to optimizing the store portfolio in the Americas.

Starbucks currently operates 15,340 stores in the United States and 4,863 stores in China, and plans to open a total of 278 new stores this quarter alone.

After announcing the earnings, Starbucks revealed in a conference call that Rose Brewer, Chief Operating Officer (COO), will leave the company at the end of this month, and her successor has not yet been decided.

Starbucks stated, "COO Brewer will leave Starbucks at the end of this month to accept the role of Chief Executive Officer (CEO) at another publicly traded company," and added, "Her successor will be publicly announced in the near future."

Earlier, Vice President and Chief Financial Officer (CFO) Patrick Grismer also announced plans to resign effective next month on the 1st, and Rachel Ruggeri, former Senior Vice President of Finance and currently an advisor to the board, has been designated as his successor.