Starbucks Corporation (NASDAQ: SBUX) said that due to the coronavirus pandemic it had lost approximately USD3.2 Billion in revenue during its third quarter. Shares fell 3% Wednesday in early morning trading and have declined 10% throughout this year.
The American Coffeehouse chain also revealed it will be closing 400 locations in the next 18 months while ramping up “convenience-led formats” like curbside pickup, drive-thru and mobile-only pickup stores.
“As we navigate through the COVID-19 crisis, we are accelerating our store transformation plans to address the realities of the current situation, while still providing a safe, familiar and convenient experience for our customers,” Starbucks CEO Kevin Johnson said Wednesday in a news release.
300 new stores are set to open during the year, compared to the anticipated 600.
“Curbside pickup is an experience accelerated due to the COVID crisis as well as customers’ increasing need for convenience in on-the-go occasions,” Starbucks said in a statement. “Over the coming months, Starbucks will increase the number of stores that offer Curbside pickup as well as pilot a select number of locations to exclusively offer this format.”
Though the company expects cash flow to be lucrative by the second half of June, same-stores sales will likely suffer. Starbucks anticipates same-store sales in both the United States and China to fall by 10% to 20% during the full fiscal year.
“With each passing week, we are seeing clear evidence of business recovery, with sequential improvements in comparable store sales performance,” Johnson and CFO Pat Grismer wrote in a letter to stakeholders. “The Starbucks brand is resilient, customer affinity is strong and we believe the most difficult period is now behind us.”
Starbucks has rectified its USD3 Billion credit agreement with fixed charge ratio covenant. The company has not touched any lines of credit since Wednesday.