Summary
Starbucks Corporation's (SBUX) Q2 2020 results, filed on April 27, 2020, were significantly impacted by the onset of the COVID-19 pandemic, which began to affect financial performance late in the quarter. Total net revenues decreased by 4.9% to $5.996 billion compared to the prior year's quarter, largely due to a 10% decline in comparable store sales globally, driven by temporary store closures, reduced operating hours, and modified store models, including a shift to primarily drive-thru and delivery channels. Despite the revenue challenges, the company highlighted proactive measures taken to support partners (employees), including extended pay and benefits, and efforts to adapt operations, such as enhanced contactless experiences. The company also reported on its liquidity position and access to credit facilities, emphasizing its ability to manage through the unprecedented disruption. While the immediate outlook for the upcoming quarters is expected to be significantly impacted, Starbucks is closely monitoring the situation and adapting its strategies to navigate the evolving landscape.
Financial Highlights
55 data points| Revenue | $6.00B |
| Cost of Revenue | $2.00B |
| Gross Profit | $4.00B |
| Operating Expenses | $5.58B |
| Operating Income | $487.40M |
| Interest Expense | $99.20M |
| Net Income | $328.40M |
| EPS (Basic) | $0.28 |
| EPS (Diluted) | $0.28 |
| Shares Outstanding (Basic) | 1.17B |
| Shares Outstanding (Diluted) | 1.18B |
Key Highlights
- 1Q2 2020 total net revenues declined 4.9% year-over-year to $5.996 billion, primarily due to the impact of COVID-19.
- 2Global comparable store sales decreased by 10% in the quarter, with a more pronounced 31% decline in the International segment due to the pandemic's impact, particularly in China.
- 3The company implemented various measures to support employees and adapt operations, including extended pay for U.S. and Canada partners and promoting contactless ordering.
- 4Operating income decreased significantly to $487.4 million from $857.7 million in the prior year quarter, reflecting lower revenues and increased costs related to partner support and operational adjustments.
- 5Despite revenue pressures, the Channel Development segment showed moderate growth and margin expansion, benefiting from at-home coffee offerings.
- 6Starbucks announced a temporary suspension of its share repurchase program in mid-March 2020 due to the pandemic, while maintaining its quarterly cash dividend.
- 7The company secured significant debt financing in March 2020, issuing Senior Notes totaling $1.75 billion to bolster liquidity and for general corporate purposes.