Starbucks Corporation (NASDAQ: SBUX) stock lost over 1.9% on 29th April, 2020 (As of 11:36 am GMT-4; Source: Google finance) after the company posted results for the second quarter of FY 20. SBUX in the second quarter of FY 20 has reported 47 percent decrease in the adjusted earnings per share of 32 cents, while reported 5 percent decline in the adjusted revenue to $6 billion in the second quarter of FY 20. The company has posted 660 basis points contraction in the Non-GAAP operating margin to 9.2% compared to the prior year due to sales deleverage and additional costs incurred driven by the COVID-19 outbreak, mainly catastrophe wages as well as increase in pay programs and additional benefits in support of retail store partners, inventory write-offs and store safety items.
The company had opened 255 net new stores in the second quarter, which reflects 6% year-over-year unit growth, ending the period with 32,050 stores globally, out of which 51% and 49% were company-operated and licensed, respectively. The stores in the U.S. and China forms 61% of the company’s global portfolio at the end of quarter, with 15,257 and 4,351 stores, respectively. Further, there has been 10% fall in the Global comparable store sales on the back of a 13% decrease in comparable transactions, which is partially offset by a 4% increase in average ticket. Americas and U.S. comparable store sales had fallen 3%, due to a 7% decline in comparable transactions, which was partially offset by a 5% rise in average ticket. International comparable store sales had declined by 31%, on the back of a 32% decrease in comparable transactions, which was slightly offset by a 1% increase in average ticket. China comparable store sales had fallen 50%, with comparable transactions declined by 53%
Moreover, due to the spread of the COVID-19 outbreak, the company has temporarily closed about 50% of the company-operated stores in the U.S., as well as more than 75% in Canada, Japan and the United Kingdom. In China, where the stores are company-operated, 98% are open but are operating under modified schedules and increased safety-related protocols, including limited cafe seating. Currently, about 50% of the global licensed store portfolio is also closed, with higher levels of closure in Europe, the Middle East and Africa, and lower levels of closure in Asia Pacific.