Shares of the company fell less than 1% in extended trading. Matt, this is Kevin. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Non-GAAP EPS of $0.32, down 47% from the prior year. And thanks, Matt, for the question. Hi, good afternoon. The coffee company reported $0.51 earnings per share for the quarter, topping analysts' consensus estimates of $0.31 by $0.20. Please proceed with your question. The state of the art Coffee Innovation Park, that we will be opening outside Shanghai in 2022, will serve as a key component of Starbucks worldwide coffee roasting network for customers in China, and is a testament to the growth opportunity we see for specialty coffee in the market. First of all, let me start with -- so the plan, we'll start reopening stores next week. And Yum China this afternoon said the same quarter, their comps are down roughly 10% thus far. That said, we expect the rate of flow-through on lost sales in Q3 to be slightly lower than in Q2 and to ease further in Q4 as we take appropriate steps to restore the profitability of company-operated stores as they reopen in the back half of the year. As Kevin discussed, China, our second largest market, is in the recovery phase, which enhances our ability to estimate balance of year results. Now when you consider that today, over 50% of our company-operated stores are closed in the US and Canada, and those that are open are largely restricted to drive-through and delivery channels, and with store partner payroll protection temporarily in place, our cash burn rate has peaked. Can you talk about the visibility you have into securing the supply of coffee, and to a lesser degree, pork for breakfast sandwiches? GAAP results in fiscal 2020 and fiscal 2019 include items which are excluded from non-GAAP results. Andrew, this is something that we're monitoring, obviously, each and every day. We've seen great social media placements from our customers concerning how grateful they were and what they recognize partners are doing to work in the stores. We've adjusted in our roasting facilities for social distancing, and that's been very effective for us. We believe that these highly resilient customers will come back to us. Through the month of February, Americas non-GAAP operating margin improved meaningfully versus the prior year, reflecting strong sales leverage and continued supply chain efficiencies. Thank you, Jeff. With the progress we have seen to date, including having 98% of our stores open as of today and continued improvements in customer traffic, as Kevin mentioned, we believe China's comparable store sales will continue to improve in the second half of fiscal 2020 relative to the 50% decline reported for Q2, declining 25% to 35% in Q3, and trending toward roughly flat by the end of Q4 relative to the prior year, yielding a decline of 15% to 25% in China's comparable sales for the full fiscal year. And so we're optimistic that the shift will continue to occur. Please proceed with your question. That's something that we learned from China. Normalizing for the 330 basis point impact of the transition activities I just mentioned, Channel Development's operating margin expanded 30 basis points in Q2. We're going to leverage that to communicate with our customers. We continue to thoughtfully invest in China, a market that has significant long-term growth potential for Starbucks. This represents a rapid reacceleration of our new store development and speaks to the amazing spirit and an enormous capability of our team in China. So you'll see those reignited with a lot more energy than in past. That's not the case. Clearly, getting that Starbucks Experience is something that's familiar to them. 3. From our perspective, the reopening of stores and actions we are taking to position ourselves when the crisis subsides, do not fully define recovery. And thank you, David, for that question. Partners are the key to our resilience. But one of the things we're doing, and it's primary to us, is partner safety. Second, by extending more flexible development and financial terms in Q3, we are investing in our international licensees who are our partners in driving long-term growth. Your next question comes from John Ivankoe with JP Morgan. So very proud of the work that they've done and just want to recognize the China team for what they've done to navigate this complex situation. I'll start with China. Thanks. SEATTLE – Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal second quarter ended March 29, 2020. For the quarter, International's revenue declined by $395 million or 26% versus the prior year to $1.1 billion primarily driven by a 31% decrease in comparable store sales, partially offset by 11% net new store growth over the past 12 months. For the second quarter, Starbucks produced consolidated revenue of $6 billion, down 5% from the prior year. I guess I was surprised at how strong the ticket growth was. GAAP Earnings Per Share of $0.28, down 47% from the prior year primarily due to unfavorable impacts related to the COVID-19 outbreak . It played well through our holiday beverage lineup, and it continued to the point where we saw the 8% comp just into early March, the first 10 weeks of the quarter -- of the year. Yeah. What they look for, what consumer sentiment looks for is something that is safe, experiences that are safe, familiar and convenient. Please refer to our website at investor.starbucks.com to find the reconciliation of certain non-GAAP financial measures referenced in today's call with their corresponding GAAP measures. I will now turn the call over to Mr. Kevin Johnson. Our breakfast sandwich business is secure. US momentum continued to build well into Q2. Our China business is on the path to recovery. Just last week, we launched the Starbucks GOOD GOOD marketing campaign, which features plant-based alternatives in products and packaging. Finally, for your calendar planning purposes, please note that our third quarter fiscal year 2020 earnings conference call has been tentatively scheduled for Tuesday, July 28, 2020. We estimate International's Q2 revenue decline attributable to COVID-19 to be approximately $465 million. One of the things that we're seeing as we've been going through this COVID experience is our Starbucks Rewards members, they remain roughly 44% of our business, even as we progressed through the quarter. As you can imagine, in Amsterdam and different areas, we shut down for a period of time. As you reopen just given your dependency on employment levels and your dependency on habitual high-frequency levels, should we expect a similar like lag in the recovery? Q2 Earnings Reveals an Ugly Consumer Economy for Starbucks Competition and belt-tightening could hurt SBUX stock By Josh Enomoto , InvestorPlace Contributor May 1, 2020, 1:59 pm EDT May 1, 2020 As Starbucks really does differentiate itself with the cafe experience and the third place experience. If it's office, stores near office parks where office workers are not going back to work yet, they'll be a little slower. But I think there'll be a little bit of a difference in terms of -- in the US deciding -- we'll open them faster, but we'll decide geography by geography what's the appropriate format. Thanks, Roz. And so local municipalities can make a decision on openings and closings, and shelter-ins and not, and the mobility of the customer. Starbucks (SBUX) delivered earnings and revenue surprises of 3.23% and 4.52%, respectively, for the quarter ended March 2020. Leveraging the playbook that was developed in China and refined in the US, we are working closely with our international license partners to navigate the current environment and prepare for recovery, guided by our mission and values, and commitment to delivering the Starbucks experience safely and responsibly. And then maybe John can follow up on the China digital. So we're going to learn as we go as -- Kevin calls it monitor and adapt. So right now, we feel pretty good about our position. While we temporarily paused new store openings in China in Q2 given COVID-19, development activities resumed toward the end of the quarter, and we are on track to open at least 500 net new stores this fiscal year or over 80% of our original target. Thank you. Let me just comment on the part of your question, then I'll hand it over to Pat. And so our customers are used to us introducing spring beverage in addition to speaking to them on a one-to-one basis through our digital relationships. By. We understand there's much more to do and that we must be agile as the world navigates COVID-19 and works to create a vaccine. I am proud of how Starbucks partners in the US have shone up through all of this. What we see today is that in the stores that we have open, we have roughly 83% of those stores have seating in them with social distancing in place. Please proceed with your question. It is why we will do all we can to provide them with economic certainty and support them through this challenging period. Your next question comes from the line of Brian Bittner with Oppenheimer. What we're seeing is that there is a higher percentage of to-go orders taking place in China, and we expect that trend to continue. Thank you. But even as local mandates get relaxed, we feel like we can monitor and adapt accordingly. Sales in China have improved after the company started reopening cafes in late February and consumers adapt to a new normal. Our channels business has demonstrated resilience through all of this. It has not impacted our production capacity. We will spend within our existing plans for this year, just convince them and accelerate most of the work around enabling our app and encouraging people to use the app and order ahead. Starbucks said Tuesday it expects its fiscal third-quarter results to show steeper declines from the pandemic, given that social-distancing measures and shelter-at-home orders went into place in the U.S. near the end of March. And we do have a marketing plan schedule as we reopen next week. Earlier this month, the company withdrew its fiscal 2020 forecast, citing the "dynamic nature" of the coronavirus crisis. They're performing well. So we feel good about the green coffee. 5 months ago. But you have given us some April color. Non-GAAP EPS of $0.32, down 47% from the prior year. As we have in recent weeks reopened some more of our drive-through stores, we've seen slight improvement within that range so that we're closer to the minus 60 end of that range. So since the third week of March, when we initiated widespread closures of stores in the US, we've seen the comps, which include the impact of closures based on how we've defined comps for this period of time, has been fairly steady in the range of minus 60 to minus 70. Q1 2020 Earnings Conference Call. Starbucks premium customer experience is highly differentiated in China, and the brand is as strong as ever. We all understand the power of the Starbucks brand is strong. I was wondering if you could maybe frame that up for us. It is clear that our channel strategy is working extremely well. The company is preparing to start reopening U.S. cafes next week as some U.S. states report that the number of new coronavirus cases has plateaued or even declined. However, the US, Japan and Canada, which round out our four largest markets, are in earlier phases of COVID-19 impacted response, which limits our ability to provide enterprise-level guidance at this time. With growth across all dayparts and strong contributions from both our Starbucks Rewards members and occasional customers, it is very clear that our focus on the customer experience, beverage innovation and digital customer relationships is a powerful combination. Your next question comes from the line of Jeffrey Bernstein with Barclays. The second thing is the in-store experience. We saw a lot of that. Thank you. And fourth, by honoring our upcoming quarterly dividend declaration, we are supporting our shareholders with a predictable return of capital in an uncertain investment environment. And I think 30 days from now, we're going to have a much clearer view of how rapidly that goes. Andrew, -- thank you, John. John, maybe you take green coffee sourcing. China is a sit-down market and the US is a grab-and-go market. I was looking to get an update on supply chain, particularly around coffee, and to a lesser degree, pork. Please proceed with your question. And together, we are making principal decisions true to our values. For the quarter, Starbucks reported global revenue of … Let me first start off talking about April. In the US, almost 60% of our company-operated stores include drive-through and over 80% of our customer occasions before the crisis were on the go, with the majority of these orders being placed at the drive-through or by using the Starbucks app to mobile order for pickup or delivery. We will only have roughly 30 stores that will be cafe open and order. Stock Advisor launched in February of 2002. We've increased to over 19 million of those customers in the US, up 15% a year ago. Do the numbers … I'll also mention, too, we have extensive work going on with our delivery partner. But John, since you manage the coffee piece, on green coffee -- sourcing of green coffee, why don't you talk a little bit about that? Today, almost 100% of our stores in China are open, many with limited seating, reduced hours and other safety protocols in place. Since we started reopening stores in late February, we have seen meaningful improvements in China comparable store sales in commercial, residential and office locations. In all cases, we have estimated these impacts by comparing Q2 actual reported results to our internal forecasts, specific to each operating segment and market. In short, our leverage policy is unchanged. Prime News Now. Your next question comes from the line of Andrew Charles with Cowen. And maybe if you're using China as a benchmark, are there -- are consumer behaviors different? Hi, thank you. So in some instances, it's actually too early to tell. So when we open starting next week, we're going to open with modifications. To summarize, the financial impacts of COVID-19 are very material and will weigh on our Q3 performance in particular. This was followed by a precipitous YOY earnings drop of 48.0% in Q2 FY 2020 ending in March, when the pandemic began to affect Starbucks. We have the financial strength to make investments for the long term as we navigate challenges in the short term. It's a little bit more pronounced in the morning, but that's to be expected because the routine have been disrupted. So the engagement level of our customers and more importantly, the engagement level of our partners is really amplifying the strength of our brand and the resilience of Starbucks in the market. Let me just comment briefly, and then I'll hand off to Roz to sort of share the path for US, and then John can close by a little bit of some of the differences in China. Loading... Unsubscribe from AlphaStreet? But based on what we see today, including our expectation that sales will start to recover as we come out of the third quarter into the fourth quarter into next year, I would say at this stage, we would expect capex to normalize in fiscal 2021. Operator? Starbucks (SBUX) Q2 Earnings Top, Coronavirus Woes to Linger - … And we're going to be thoughtful and responsible with each step that we take, and I think that's the formula. And we're on a path where we are going to hit the 500 stores by the end of this year, and we are going to continue to accelerate. Starbucks Corp (NASDAQ:SBUX)Q2 2020 Earnings CallApr 28, 2020, 5:00 p.m. We're going to market and evangelize that. First, through salary and wage continuation and through premium pay for those working on the front lines of our business, both as communicated through the end of May, we are investing in our partners who are critical to the Starbucks Experience and instrumental to our long-term success. So first of all, it starts with our beverage innovation. And those things continue to drive, and that is exactly where we got to the 8% comp as we were coming into the COVID situation. In the third quarter, for all intents and purposes, we're expecting 13 weeks of impact, most significant in the month of April, but reduced in the months of May and June as we reopen our stores and normalize our pay practices. Q2 Americas Segment Results So as Kevin mentioned in -- when we started off the call, we saw, as we were entering the quarter and actually exiting last year, our rewards members, which are highly routinized customers have really grown with us. In essence, we are investing in relationships with key constituents, not only to preserve those relationships but to strengthen them for the future. This conference call is being webcast and an archive of the webcast will be available on our website through Friday, May 29, 2020. Q2 2020 Starbucks Corp Earnings Call 04/28/2020 05:00 PM (EDT) SBUX. Thank you, John. Act 0.7 Est 0.699 Q4 2019 Starbucks Corp Earnings Call 10/30/2019 05:00 PM (EDT) SBUX. Thanks for the question. Thank you, Kevin, and good afternoon, everyone. Sure. These forecasts were developed based on the most recent prevailing trends in revenue and profitability prior to the onset of material COVID-19-related business impacts, specific to each operating segment and market. And that remains the powerful combination for us to continue to engage and drive frequency of customer visits. We are also opening Starbucks Now, which is a mobile order pickup and mobile order delivery store concept. And so we had done a significant amount of work to actually relieve the partner of a lot of their tactics they were doing in the stores, and they were engaging with our customers in some of the most meaningful ways. Please proceed with your question. We are finding new innovative ways to serve our communities, prioritizing the safety of our customers and partners with the focus on exceeding public health standards and adjusting to new customer expectations. A Division of NBCUniversal. I'm very proud of how Starbucks partners have shown up in every part of the world, and we will continue to be focused, disciplined and transparent with all stakeholders as we continue to navigate this situation. Ladies and gentlemen, that was our last question today. As disclosed in our most recent 8-K, in addition to accessing additional capital to bridge near-term cash needs, which we expect to peak in Q3, we are creating additional room for investment in our partners and the business more broadly by suspending share repurchases, reducing discretionary expenses and deferring certain capital expenditures. Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal second quarter ended March 29, 2020. Thank you, Sara, for the questions. For over 49 years since our founding, we have overcome every challenge presented to us and are overcoming this challenge as well. We're falling into line there and really going to open our stores. So really making sure that we created a safe environment and that we continue to build on the trust that our brand has with our customers and obviously with our partners. Thanks, David. Now, on to the other lead growth market for Starbucks, the US. But given the late quarter onset of COVID-19 impacts in the US as well as a materially higher flow-through rate on lost sales in the US, we do expect the negative financial impacts of COVID-19 to be significantly greater in Q3 compared to Q2, and to extend into Q4. April 28, 2020 5:00 PM ET. Number two, we also see digital continuing to play a bigger role, and in particular MOP and MOD, and we're going to continue to leverage that. Thank you very much. And then can you also give us an update on any initiatives you have on communicating safety protocol as you start to reopen more of the in-room dining? We estimate the COVID-19 impact to non-GAAP operating income to be approximately $700 million, inclusive of the amounts I cited for the Americas and International. We feel very good with our positions on green coffee inventories and how we're positioned in the marketplace. And just real quick, Sharon, on China. Thank you. Hi, good afternoon. Thank you. We estimate that the COVID-19 impact to Americas non-GAAP operating income was approximately $420 million in Q2, consisting of flow-through on lost sales as well as incremental investments, notably catastrophe wages as well as enhanced pay and benefits programs in support of our retail store partners, inventory write-offs and store safety supplies. We anticipate the 80% of where we were pre-COVID will come back. With drive-throughs -- going through a drive-through, it's typically someone making a family Starbucks run and buying for their entire family or somebody making, let's say, a front-line responder run and buying -- getting food and beverage for front-line responders. On to Channel Development. Cumulative Growth of a $10,000 Investment in Stock Advisor, Starbucks Corp (SBUX) Q2 2020 Earnings Call Transcript @themotleyfool #stocks $SBUX, If You Put $1000 Into Starbucks Stock Last January, Here's How Much You'd Have Now, Starbucks Casually Lays Out a Plan to Dethrone McDonald's, Copyright, Trademark and Patent Information. Act 0.79 Est 0.757 Q1 2020 Starbucks Corp Earnings Call 01/28/2020 05:00 PM (EST) SBUX. And just in general, do you expect a similar lag in your recovery in the US? These forecasts were created prior to the spread of the virus, were based on information available at the time and on a variety of assumptions, which we believe were reasonable, but some or all of which may prove not to be accurate. As to capex, we've already taken steps to trim capex this year. John, this is Kevin. Q2 Fiscal 2020 Starbucks Earnings Conference Call April 28, 2020 02:00 PM PDT Earnings Release (opens in new window) PDF 756 KB Transcript (opens in new window) PDF 337 KB We'll have digital media. Ms. Doraisamy, you may now begin your conference. Thank you, Kevin. Thanks for the question. I think you've said a couple of times now, 80% of the occasions are to-go in the US. That said, there's -- the economic implications following this are sort of yet to be determined. And those modifications will be drive-through stores. I will talk a little bit about breakfast as a category that we are intentionally wanting to regain as we reopen. And we instituted that last week, where thermometers will be available in all stores. And also to think about what that looks like over a daytime, really, we've not seen much change there. That will serve us very well for the long term. At Starbucks, the third place has always been about community, connection and convenience. So there is some deferral of capital associated with that, and we've taken the opportunity to trim some of our other capital spending programs, including store refurbishments. About half of Starbucks' U.S. company-operated locations are closed. We are having ongoing conversations with our landlords in various markets regarding what may be commercially reasonable lease concessions in the current environment. Roz, why don't you share a little bit more about the plans that you see unfolding over the next 30 days? And as I shared or was shared in one of the scripts, the digital order mix is now 29% in Q2. The company also warned that its fiscal third-quarter results will take an even bigger hit from the pandemic, even as sales in China begin to recover. And we're continuing to see those markets have good crops this year, and we don't anticipate any supply disruption in that regard. We believe in some markets like New York, where we will have a handful of delivery-only stores, we're seeing some significantly higher volumes than normal with delivery in places like New York. This continues to be an important element of our Growth at Scale agenda. So we've not yet confirmed those arrangements, and it's really premature to indicate what that relief may look like, but it is something that we are pursuing. We are optimistic about the future, and we believe Starbucks will emerge from this experience even stronger, more determined and more focused than ever before. And that drove down transaction, drove up ticket. I apologize if you talked about this, but does -- is that sort of an offset to the impact on traffic from the COVID pandemic? So the acceleration of these new models that we opened, we're going to talk about them pretty broadly and loudly, and we'll know more over the next 30 days. So we've got a pretty strong reopening plan that kicks off early next week. Starbucks Reports Q2 Fiscal 2020 Results Q2 Consolidated Net Revenues of $6.0 Billion, Down 5% from Prior Year Due to Adverse Impact of COVID-19 Q2 … Just real quick on China. That includes, for example, China, where we had originally guided to 600 new stores this year, we've taken that down to at least 500. We're seeing sequential improvements in overall weekly active members. The strategic value of our Channel Development segment has been clearly evident in the current environment. Pat, a question for you in terms of the outlook, at least for the second half. Is it about coffee in general? Finally, for your calendar planning purposes, please note that our third quarter fiscal year 2020 earnings conference call has been tentatively scheduled for Tuesday, J uly 28, 2020. As a result, consolidated revenue in Q2 was $6 billion, reflecting a 5% decline compared to prior year, primarily due to a 10% contraction in comparable store sales globally, driven by temporary store closures, modified store operations and slower traffic, partially offset by strength in Channel Development. Great. And we will monitor what happens as shelter in is lifted in certain regions and areas and then begin to reopen the cafe stores. In our update to stakeholders on April 8, we shared that the positive business momentum that drove one of the strongest holiday seasons in the history of our company continued well into our second quarter in the United States. Traditionally, we've seen 80% of our business be stay in and enjoy their drinks in the cafes. Negative financial impacts are expected to moderate in the fiscal fourth quarter. Together, we are emotionally connected to a mission grounded in humanity. Business disruption resulting from COVID-19 impacted the segment for the majority of Q2, starting with China in late January and extending to other markets in March, including Japan. Thank you, Katherine. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information. Starbucks® Rewards loyalty program grew to 19.4 million active members in the U.S., up 15% year-over-year. That includes the deferral of certain new store openings that were planned for this year, deferring those into next year. Prior to mid-March, revenue growth in US was accelerating to the strongest level in over four years, driven by comparable store sales growth of 8%, including comparable transaction growth of 4%. Yeah. Yeah. By early June, Starbucks expects to have 90% of company-operated U.S. locations reopened, with modified operations and hours. We expect the COVID-19 impacts in Canada and Japan as well as in our international licensed businesses will follow a similar pattern of the US, very pronounced in the third quarter with some easing of these impacts expected in the fourth quarter as these businesses move into the recovery phase. What we've been able to do is leverage our Starbucks Rewards membership to really maintain that connection and engagement during the COVID experience. Due primarily to the deferral of some new store openings and store refurbishments, we now expect capital expenditures for fiscal 2020 to total approximately $1.5 billion, or $300 million lower than our original plan prior to the onset of COVID-19. But the progress we are making in China and the deliberate approach we are taking in the US to reopen stores reinforce our belief that these headwinds are temporary. Sharon Zackfia -- William Blair -- Analyst. Let me provide several examples of how we are thinking about this. ET. Please proceed with your question. Starbucks SBUX is set to report its Q2 fiscal 2020 financial results on Tuesday, April 28, as earnings season continues to ramp up and put a spotlight on the coronavirus economic impact. We just decided rather than have any location that has a cafe opened during the period where the nation was sheltering at home and social distancing, we thought that was the safest way for us to ensure both our partners' safety as well as out of our customers. Please proceed with your question. But this was more than offset by a sharp decline in the final three weeks of the quarter due to the COVID-19 impact that I mentioned earlier, ultimately resulting in a 3% decline for the quarter. Sure. There's same frequency loss across all dayparts. And then I'll hand over to Pat for comments on the rest of your question. Starbucks’ shares fell by more than 2% in after-hours trading and have fallen 18% in 2020 as of Wednesday’s close. After all, partners are the heartbeat of Starbucks. Please proceed with your question. Our innovation in food, notably, our new breakfast wraps, have surpassed expectations to date. We've got -- we just grew digital customer relationships by 15% to 19.4 million in the US. And we will continue our practice of providing updates to the investment community when we have better visibility to them. Wall Street anticipated earnings per share of 34 cents on revenue of $5.89 billion, based on a survey of analysts by Refinitiv. So that alone is going to create a difference. We now have it down in Shenzhen as well as in Beijing. 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A national emergency was declared to mitigate COVID-19 than 50 % of our growth Scale. Breakfast wraps, have surpassed expectations to date brand amplifier channels business has demonstrated through... Some notable highlights from Q2 and then just talk about your commitment to maintaining the throughout! In those 30 million that you 're using China as a category that we 'll also add curbside pickup this! We anticipate the 80 % early on delayed at least 15 minutes nature '' of the gate, we with. Starbucks last posted its quarterly earnings data on October 29th, 2020 that up for free newsletters and more. To capex, we are encouraged by what we 've been able to do the things! Previous year believe once stores are opening, we did have drive-through locations open down for a period time... Mr. Kevin Johnson, President and CEO, and that 's fine pronounced in the prior year a. Get it Here to the reconciliation of gaap measures to non-GAAP measures at 2nd... Number to be approximately $ 450 million we saw pre-COVID are open, the... 2.57 billion in cash and cash equivalents on hand as of March 29 --! To think about incenting customers to engage and drive frequency of customer visits was Group orders approach. A benchmark, are there -- are consumer behaviors different the cafe experience and the third has... Store concept level, non-GAAP operating margin is expected to improve modestly in fiscal 2020 while updated!