(Bloomberg) — Starbucks Corp. Chief Executive Officer Kevin Johnson said a key measure of sales turned positive in July — a sign that the coffee giants recovery from Covid-19 lockdowns is gaining steam. The shares extended gains in late trading.
Our recovery strategy is working, Johnson said during a call with analysts following the release of the companys quarterly results.
He said that U.S. comparable-store sales, a key gauge of restaurant performance, were positive in the month of July for the 3,100 company-operated stores that have remained open during the entire quarter, which ended June 28. For comparison, the company operates more than 8,800 stores in the U.S. overall.
This may indicate an inflection point after the global pandemic bludgeoned Starbucks business first in China at the start of the year and then across the rest of the world. Another restaurant titan, McDonalds Corp., reported a similar trend earlier on Tuesday, with U.S. same-store sales turning slightly positive this month.
Even so, the Coronavirus impact is clear: Global same-store sales fell 40% in the fiscal third quarter that went through June 28. Thats slightly better than the estimate from Consensus Metrix. Revenue, meanwhile, was $4.2 billion, beating analysts average projection.
Starbucks, like its restaurant peers around the globe, has been trying to adapt to a new normal where diners prefer to order delivery and hardly anyone pops in for a latte on the way to work or school. The coffee seller this summer accelerated the rollout of its pickup store concept, with smaller-format locations that dont have customer seating, but with fewer drive-thrus and less delivery penetration than some rivals, the chain has a lot of work to do to draw in customers in the new era of consumer caution.
The coffee chain sees same-store sales down 12% to 17% for the full fiscal year, making it one of the first restaurant companies to offer an outlook amid the pandemic disruption of 2020. The impact of Covid-19 will moderate meaningfully during the current quarter, the company said.
It estimates that comparable sales for all U.S. stores it operates will be fall approximately 14% in fiscal July — a sequential improvement from Junes 19% decline. The company said it dialed back some U.S. operations this month amid regional coronavirus flareups.
In China, a key market for Starbucks that is farther along in its recovery from Covid-19, comparable store sales declined 19% in the quarter and the company sees the business substantially recovering there by the end of the current calendar year. In the U.S., same-store sales were down 40%.
But while overall transactions are down, when customers do treat themselves to Starbucks, theyre spending more. Average ticket — or the total bill — was up 23% in the quarter globally.
Starbucks shares gained as much as 7.2% in late trading, surging after Johnson reported that comparable sales were positive in July. The stock has fallen 15% through Tuesdays close.
(Updates to include comments from CEO on July same-store sales and share moves.)
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