SBUX Q1 2020 Earnings Performance. I think the brand is strong. First, our recovery strategy is working, as evidenced by the improving business results across all of our key segments. GAAP results in fiscal 2020 include several items related to strategic actions including restructuring and impairment charges, transaction and integration costs and other items. Yeah, David. Brian Bittner -- Oppenheimer & Co., Inc. -- Analyst. Is it a frequency dynamic? That has never been more true than it is today. (RTTNews) - Below are the earnings highlights for Starbucks Corp. (SBUX): -Earnings: -$678.4 million in Q3 vs. $1378.8 million in the same period last year. And every step of the way we supported our global license partners in markets around the world. It's nearly impossible to predict whether and when those might happen. Let me begin in the U.S. where the recovery accelerated throughout Q3. Building on the positive recovery momentum from Q2, China demonstrated sequential improvements in monthly comparable sales across Q3, exceeding our expectations for the quarter. And in many ways, we navigated this by prioritizing the safety and the health and well being of our partners and the customers we serve. News Your source for the latest news from Starbucks. It was more -- it's more just as a resurgence happens in a large market like that that we -- when it happens like that, we're able to sort of turn the dial back slightly on the range of customers' experiences we serve through to the principles that we outlined and we help support government and local health officials as they contain the spread of the virus. We are not anticipating that that overall level of spend will diminish going forward. But it's really too early for us to tell what the real benefit will be. Durga Doraisamy -- Vice President-Investor Relations. So we do expect to see a combination of margin headwinds and tailwinds, but far away the biggest driver of the margin recovery will be the sales recovery. Sure. And although the margin impacts of partner benefits and inventory reserves are expected to subside considerably in Q4, the leading driver of margin pressure will be continuing to deleverage a fixed costs, such as occupancy and depreciation expense as we work to restore sales. So you can access a curbside from the app where it is available currently. This represented about 85% of our total investments for the quarter. Your next question comes from the line of Brian Bittner with Oppenheimer. This significant new addition will open up an invitation to join Starbucks Rewards to a much wider audience. Looking specifically at the comps of the 3,100 U.S. stores that remained open throughout the entire quarter, those stores improved sequentially from minus 14% comp in May to minus 1% in June to a positive 2% comp for July month-to-date. Starbucks' (SBUX) fourth-quarter fiscal 2020 results hurt by decline in traffic and the coronavirus pandemic. So thanks everybody. And so then we start turning the dial back up and opening up those customer experiences. We are navigating a global pandemic, but we know exactly how to do it. Please proceed with your question. I know that the rewards is a little bit less frequent, I think than the regular rewards program. Those two points reinforce an optimistic view of our future. United by our mission and values and guided by three simple principles. As digital adoption accelerates in China, we continue to innovate in ways that deepen customer relationships and extend the reach of the Starbucks experience across a variety of digital platforms and ecosystem. There are some things that we're considering in terms of innovation and then there are some things that we are accelerating in the innovation pipeline. A Starbucks Coffee in Harlem is closed, as retail sales suffer record drop during the outbreak of the coronavirus disease (COVID-19) in New York, April 15, 2020. All Rights Reserved. We continue to see improvements in the morning peak period as well as some customer occasions shifting to later in the morning daypart. We provided Starbucks partners economic certainty through the shutdown, while prioritizing their health. And I think that bodes well for the innovation that we've been driving and announcing around our plant-based offerings. So then if you wanted to order for gift-giving, some of our serveware, a mug, a nice cup. Despite the pandemic, Starbucks opened 130 net new cafes worldwide during the quarter. Please proceed with your question. Yeah, just a few things. Finally, our recent announcements of plant-based beverage and food innovation through partnerships with Beyond Meat, Impossible and Oatly, reflect the fact that customers want more plant-based options. But I guess with the down 14% in July, is it correct to assume that the afternoon daypart or post-10:00 AM daypart is meaningfully positive? As your question has been withdrawn, and I will proceed to the next question. We have now developed new levels of agility and resilience that position us well for the future with the mindset and capability to safely, effectively and confidently drive our continued recovery. But what we've seen is continued demand for Starbucks. In terms of should recession -- recessionary period start to hit, I think we've differentiated ourselves. As we see customer visits shifting from urban cafes to suburban drive-thrus, customers are also purchasing multiple beverages and food items on a single order, essentially a group order. We estimate that the COVID-19 impact to decline in International's Q3 revenue and operating income with approximately $760 million and $420 million respectively. And we're seeing a shift to mid-morning around that 9:30 timeframe and then another pickup in the afternoon, around 2:00 PM. Here's what the company reported for the quarter ended June 28 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv: The global coffee chain reported fiscal third-quarter net loss of $678.4 million, or 58 cents per share, down from net income of $1.37 billion, or $1.12 per share, a year earlier. It now expects to earn between 6 cents to 21 cents, down from its prior forecast, released in June, of 11 cents to 36 cents. Recent examples include Cold Brew with Cinnamon Almondmilk Foam in the U.S. And Oatmilk versions of two signature Starbucks beverages in China, Oatmilk Latte and Oatmilk Matcha Latte. And I don't necessarily see that as being a driver of the fact that people work from home or we have curbside. Reopened locations often had reduced hours and limited operations. Please proceed with your question. Executives said that they expect same-store sales to recover more substantially in China and the U.S. by the end of its fiscal first and second quarters, about a year after the crisis began, assuming there are no new sustained waves of infections or major economic disruptions. While nearly half of our sales now comes from Rewards members who are pre-loading their store value cards, we've heard from many more customers that they would like an option to earn rewards when paying directly with cash, credit, debit and select digital wallets. Global same-store sales plummeted 40% during the quarter. July 28, 2020. •. Hi. Durga Doraisamy – Vice President-Investor Relations Hi. We're also doing work that handheld will enable if you wanted to just -- if the line began to get long, if you are picking up and trying to walk into the stores. As we reopen stores to include mobile orders, entryway pickup and in-store to-go orders, ticket growth moderated and transaction volume increased as the quarter unfolded. This benefit was largely offset by traffic softness that emerged in Beijing in the last two weeks of the quarter due to a resurgence of COVID-19 in that city. Roz? Starbucks Corp (NASDAQ:SBUX) Q3 2020 Earnings Call Jul 28, 2020, 5:00 p.m. Before we conclude this call, I want to thank you all for joining us today. So those dense areas are being transformed by the new network of stores. Good for your health and good for the planet. I think as we see a resurgence of cases, similar to what we've seen in Beijing, that causes a little bit of -- that's what's caused a little bit of the delay by a quarter in China. With the expectation of COVID-19 impacts continuing to ease in the fourth quarter, particularly in Japan, we now expect Internationals comparable store sales to decline between 10% and 15% in Q4, including a 3% favorable VAT impact. Follow us on Twitter @StarbucksNews. Your next question comes from the line of Andrew Charles with Cowen & Company. Through a combination of new store operating protocols and service channels, we were able to amplify a number of contactless experiences for our customers, including drive-thru, entryway pickup with mobile order and pay and delivery. And I was wondering if you could elaborate on what the plan is to build that back specifically? Early results from these innovations are very encouraging. Starbucks, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $6.20 billion for the quarter ended September 2020, surpassing the … Now I'd like to share some perspective on our U.S. and China recovery curves going forward. Learn about what is happening in our stores and company–from beverage and food announcements to financial news, partner (employee) and customer experience updates. And showing up in a responsible and positive way in each and every community we serve. Hi, thank you. We will build on this momentum in the fall when we introduce a new pay-as-you-go option for Starbucks Rewards members in the U.S. and Canada. ET. If you can give a comment on that specifically, because that's what we are hearing from other restaurants? Your commitment, dedication and caring for one another as well as our customers and the communities in which we operate through this pandemic is heartwarming. I'll take your questions. The next question comes from the line of John Glass with Morgan Stanley. But I have a question really on the U.S. business. But in the next couple of quarters, we do expect margins will continue to lag prior year. First of all, I'll start with your second question, China. Costs related to the pandemic, like paid leave for baristas and added safety measures, weighed on its profits. Thanks, David for the question. And there was an additional 2% revenue dilutive impact of transitioning our Thailand business to licensed operations last year. But to me, it looks like the big difference is more on the profit line with the comps this quarter kind of pretty consistent maybe with guidance. Clearly, the priority or the customer behavior was around safe, familiar, convenient experiences. Our digital reach is strong. As a result, Starbucks Rewards as a percentage of tender in Q3, rose four percentage points from a year ago to 46%, which is above the pre-COVID tread, highlighting our success in acquiring new loyalty members as well as reengaging our existing customer base. Roz, would you help us understand the potential sales lift for a store that adds curbside? Starbucks (NASDAQ: SBUX) posted a 157.76% decrease in earnings from Q3.Sales, however, increased by 46.92% over the previous quarter to $6.20 billion. GAAP results in fiscal 2020 and fiscal 2019 include items that are excluded from non-GAAP results. They know how to adapt. And it's all credit to our Starbucks partners. Mobile order sales mix reached 23% of sales in Q3 with 12% coming from delivery and 11% from mobile order-and-pay, well above the mid-teens levels we saw pre-COVID. Currently, with modified operations and limited cafe seating in nearly 40% of our stores as well as 4% of the portfolio remaining closed, we estimate that our fiscal July comparable store sales for U.S. company-operated locations will be approximately minus 14%, a sequential improvement from the minus 19% that we delivered in June even as we dialed back some of our U.S. operations in response to some regional COVID-19 flare-ups. In terms of capacity and what we think could help, for instance, our drive-thru. Please proceed with your question. They've done a phenomenal job. For the month of June, China's comparable store sales declined 16% after excluding an eight percentage point VAT exemption benefit, about half of which was related to a true-up for the first two months of the quarter. Let me close by reinforcing two key messages, I hope you take away from this call. So we quickly figure out, if we launch curbside, we're going to get more customers. And so I think based on what we're seeing in terms of the demand and by being able to increase throughput in those channels that are viewed as safe and convenient by our customers, that's going to help us on the recovery curve. 32,000 stores around the world. I'm just wondering if you could talk about your performance a dozen or so years ago and why maybe the brand better insulated this go around, maybe comparing and contrasting the U.S. versus China? Importantly, both sales and profitability trended positively across the quarter with sequential improvements in each month and comparable store sales were toward the better end of our guidance range. And unlike many, many others in the industry, in April, -- yeah, In April, we closed all our stores with the exception of drive-thrus. And also even with curbside, do you see potential to add some new products that you might not be able to add without that option? This has been a quarter where demand for at-home coffee has soared, and our Channel Development business has demonstrated tremendous resilience and gained market share as customers adjust to their at-home routines. During Q3, Starbucks (NASDAQ: SBUX) brought in sales totaling $4.22 billion.However, earnings decreased 284.1%, resulting in a loss of $772.30 million. Starbucks Q4 2019 Earnings Infographic Starbucks Corporation (SBUX Quick Quote SBUX - Free Report) will report third-quarter fiscal 2020 results on Jul 28, after the closing bell. And then if I look at 4Q, just trying to understand again the comps actually maybe the midpoint of the same or a bit lower in most markets, but are you being conservative again on the EPS? This is who we are at our core. But I am curious how you think about this potential longer term shift in work from home for many consumers? So couple of questions related to that. Starbucks today announced its Q3 FY20 earnings results, providing insight into the company’s continued road to recovery from the COVID-19 pandemic. So in relation to Q3, compared to the expectations we had when we filed our 8-K on June 10, you're absolutely right. Thank you. And I'm very proud of how Starbucks partners around the world have responded during this global pandemic. Returns as of 12/20/2020. Happy to answer your question. One, to expand the funnel on the customer base. We have to prepare operating plans and focus our teams on continuing to deliver results. The company expects the negative financial impacts of COVID-19 to be significantly greater in Q3 than Q2 FY20 and to extend into Q4 FY20 but at a more moderate level. I wanted to go back to the comment, Pat, you made about the margins recovering slower than sales. And that was clearly to provide a safe environment for our partners and as well as the contactless experience for us to handcraft beverages and food items for our customers. Importantly, as we exited Q3, we were cash flow positive with upward momentum, setting us on a solid path to reduce our financial leverage in future quarters. My hope is that through this discussion we've been able to give you a sense of the confidence we have in our ability to navigate this global pandemic. ... including Starbucks Annual Report on Form 10-K for the fiscal year ended September 27, 2020. Adding drive-thrus out in those metro suburban areas near where people are working from home, it's our highest concentration of drive-thru units. And so we've adjusted appropriately. And so that's why I think we saw such a dramatic increase in the number of app downloads and customers that joined the rewards program because that is the safest way to order. We expect the VAT exemption will expire at the end of December. 21% % growth in dollar sales, outpacing the coffee category, which grew 13% in the quarter. These investments totaled approximately $350 million in the quarter and were focused on three key areas. And as a result, we would not anticipate significant government stimulus program benefits by way of payroll tax credits. By adding this capability to Starbucks Rewards, we will give customers more ways to pay and earn rewards when using the Starbucks App. And in the process, making meaningful progress against our planet positive goals. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information. And then the work that we plan to do to market, the new loyalty program. Starbucks' (SBUX) fiscal third-quarter results are likely to reflect dismal performance of Americas and China. And can you help us think about where that has the greatest impact? Just had one follow-up on the dayparts. For certain non-GAAP financial measures mentioned in today's call, please refer to our website at investor.starbucks.com to find the corresponding GAAP measures as well as a reconciliation of these non-GAAP financial measures with their corresponding GAAP measures. Good afternoon, and congrats on navigating through what we hope is the worst of the COVID shock here. And so that will come forward quicker than planned. Moving to Channel Development. Adding it all up at the enterprise level, globally, we expect revenue to decline between 10% to 15% in Q4 versus the prior year, primarily reflecting the negative impact of COVID-19, which we estimate to range between approximately $1.4 billion to $1.65 billion. Got a confidential news tip? It's encouraging what we saw in our trial base. For China specifically, we expect Q4 comparable store sales to range between flat and minus 5%. Please proceed with your question. So if there is any question that closing stores was going to create a longer term loss of market share is disproven because we saw clearly in the month of May, we did -- we were even on share in the month of June, we gained share. You will see us coming into the fall with excitement around our work with Pumpkin Spice Latte. And second, a prolonged slowdown in international and domestic travel, impacting Starbucks locations at China's airports and tourist venues. And so we look forward to curbside to give our customers just one more contactless opportunity and our partners a chance to deliver the best customer service to our customers. And so when those rates rise in certain areas, we will adjust the hours in those stores, we'll know that we have partners available to work and we will apply them to the store. So just recently, we added merchandise to the app. And so we have productivity tools in the store that help us manage when labor hours are needed. The U.S. business posted a comparable sales decline of 19% in June, improving from minus 43% in May, restoring the business to positive profitability for the month. We've got lots of points of presence. And for International, we expect full year comparable store sales to decline in the range of 20% to 25% in fiscal 2020, including a 1% favorable VAT impact. We've developed a new level of agility and resilience for the future. In relation to Q4, I think it's fair to say that our outlook is pretty comparable to what we had forecasted as of that June 10 8-K. We have narrowed the range for the U.S. business and for the Americas generally because we have more visibility to our results for the quarter as we're nearly one month into our fourth quarter. Starbucks Announces Q3 Fiscal Year 2020 Results Conference Call. And so we're continuing to roll that out. Sign up for free newsletters and get more CNBC delivered to your inbox, Get this delivered to your inbox, and more info about our products and services.Â, © 2020 CNBC LLC. There is typically cars lined up and often times out into the street. [Operator Instructions] Your first question comes from the line of Jeffrey Bernstein with Barclays. And with that, Kevin and I are happy to take your questions joined by Roz Brewer, as Durga outlined at the top of our call. We're going to continue to innovate in ways that are relevant to our customers independent of the channel by which they buy from us. Margins are expected to follow in the next two quarters. Starbucks … Thank you. But I would highlight that as a concept, our advertising spend has historically been pretty low because of the strength of our brand and the amount of marketing that we attract. Just to add a high level, a lot of retailers or restaurants have determined they can do more with less during this period of time,and they've learned that they can make labor more efficient, menus more efficient. For Q3 FY 2020, however, analysts expect the recent declines to intensify, with quarterly revenue of $3.2 billion compared to $5.5 billion in Q3 FY 2019, a YOY drop of -39.2%. We also expect Americas and U.S. comparable store sales to be down 12% to 17% for Q4 and for fiscal 2020. We saw a much better flow through, more profit performance than we did improvement in sales. Yes, John. Starbucks Corporation SBUX will report third-quarter fiscal 2020 results on Jul 28, after the closing bell. Americas & China Comps to Hurt Starbucks' (SBUX) Q3 Earnings - July 24, 2020 - Zacks.com But those are also the areas, those dense areas that we are bringing in our new trade area transformation work, we're realigning the network of stores to increase what we are seeing in terms of revenue in that trade area and optimizing the profitability. I will now turn the call over to Kevin. Let’s take a look at this coffee giant’s fundamentals ahead of its earnings release. Ms. Doraisamy, you may now begin your conference. We're having great success bringing new customers onto the app and into the rewards program. Starbucks also narrowed its outlook for U.S. same-store sales for the remainder of the fiscal year. While the recent flare-ups of COVID-19 in several parts of the U.S. underscore the persistent uncertainty in our operating environment, we expect continued improvement in our U.S. business in Q4, bolstered by the focused actions that Kevin described in relation to our contactless customer experience, digital capabilities and beverage innovation. Finally, for your calendar planning purposes, please note that our fourth quarter and fiscal year 2020 earnings conference call has been tentatively scheduled for Thursday, October 29, 2020. So let's go to Roz. As you would expect, much of the year-over-year reduction in our operating margin was due to sales deleverage as well as incremental expenses to provide a safe experience in our stores, all related to the impacts of COVID-19. It marked the worst quarterly earnings performance in nearly four years as … And I think, Kevin, you mentioned the morning routine business is going to be the most difficult to build back. Throughout this dynamic period, I believe the combination of principal decision making and transparency in our communication has built trust, trust with all stakeholders. Pat, I'd also like add that we are also working, as we've talked about before, to look at equipment efficiencies in our stores. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. This new handheld, that capacity that we are creating, allows us to do what a lot of retailers call busting the line actually. Starbucks Reports Q3 Fiscal 2020 Results. Thanks, Kevin. We have also accelerated the rollout of a similar concept in China, Starbucks Now stores, adding nine new locations in Q3 for a total of 15. Thanks for taking the question. Your next question comes from the line of Matt DiFrisco with Guggenheim. So we continue to push curbside. For the quarter, Starbucks reported global revenue of … And so we do have methods in place to make sure that we're managing just as efficiently as possible in these uncertain times. Good afternoon, everyone, and thank you for joining us today to discuss our third quarter fiscal year 2020 results. That's the experience in our stores and these different channels we're talking about. Obviously, the deployment of mobile reach is building more customers that become sticky. The interesting thing about curbside for us is that it is tech-enabled. And that puts us in a position of confidence in how we can continue to navigate the global pandemic as it evolves. The last several months have been quite unprecedented in regard to public health and commerce given the impacts of COVID-19. With the differentiated capabilities and strategic advantages we enjoy in China, including our digital partnership with Alibaba and our access to emerging technologies through our co-investment relationship with Sequoia Capital, we are confident that we will substantially recover our sales in China by the end of this calendar year, demonstrating the strength and resilience of the Starbucks brand in our fastest growing market. Thanks for the question. Starbucks stock rose late. In fact, the Q3 90-day active members increased 25% over Q2 to 9.9 million, representing 9% growth over the prior year. Kevin, you talked some about how solid customer demand remains, and perhaps, it sounds maybe little changed from pre-COVID levels, and therefore, I think you're highlighting the importance of throughput and operations to continuing to drive sales. We're pleased overall with the progress we've seen to-date. We are shifting more beverage and food menu items to include plant-based options. We are accelerating efforts to expand these offerings for our customers. In addition to accelerating our store transformation strategy, we are creating new capabilities that expand digital customer engagement. Pat, just unpacking your comments on the 2021 same-store sales recovery, do you anticipate store level volumes in the U.S. fully recovering to pre-COVID levels by 2021 or do you really need an environment to shift where employment is fully restored and people are back to their pre-COVID routines or can you get back there in this new normal environment we're all living in? Globally, we expect comparable store sales for Q4 and for fiscal 2020 to decline between 12% and 17%, demonstrating sustained sequential improvement, including across both of our key markets of the U.S. and China. Despite the increase in … U.S. same-store sales fell 40% in the quarter. Thanks. In urban core markets where drive-thrus and curbside aren't feasible, we will begin to reposition our store formats to create a blend of traditional Starbucks stores with new Starbucks Pickup stores. Now, as we started reopening stores in May and customers -- we began to -- with mobile ordering and contactless entryway pickup, we continue to see customers coming back to us. I'll start by saying, throughout this quarter, we have navigated the pandemic in a way that I consider very consistent with Starbucks mission and values. I will then discuss our guidance for Q4 and fiscal 2020, followed by a preliminary perspective on fiscal 2021. -EPS: -$0.58 in Q3 … Starbucks assumes no obligation to update any of these forward-looking statements or information. And yet at the same time, we stayed true to the principles that we outlined, which is prioritize the health and well being of our Starbucks partners, the customers we serve, to also support government, local health officials as they work to contain the spread of the virus, and third is to just show up in a positive and responsible way in every community we serve. And we saw that certainly in the month of June where we saw a very good response from customers that helped us exceed expectations on what we would see in sales and then that's continued into July to progress. Presentation: Operator. Let me just thank all of you for joining us today. You'll see us market for holiday beverage plans. And just to build on what Roz just said in relation to our fiscal '20 spend, to Roz's point, the level of spend in Q3 was markedly higher as a percentage of revenue than Q2, in part due to some of the deferral of our marketing activity. In China, since we began our China digital partnership with Alibaba two years ago, we've worked together to deliver innovative digital services to our customers and transform to coffee industry in China. A lot of them have been answered already. Prioritizing the health and well being of Starbucks partners and the customers we serve. Given the strength of our brand, our advanced digital capabilities and our strong balance sheet, I believe this is one of those rare opportunities to move aggressively and further differentiate Starbucks from our competition, and I will highlight three areas where we are doing just that. And so we're able to get out of the store, get out in that line, put an order and in a queue much faster and get those out-the-window times down and get the beverage and food items to the customer much quicker. And so you may have heard the announcement around our new pay-as-you-go plan. And then, Pat, why don't you take the back half of this question on G&A and how that all comes together on the P&L. David Tarantino -- Robert W. Baird & Co., Inc. -- Analyst. I will first provide some highlights of segment operating results and consolidated margin performance for Q3. And so that was the contributing factor in China. Thank you, Roz. In addition, with national coverage in the U.S., Starbucks Delivers transactions tripled in Q3 from Q2 levels, with the highest volume in the late morning and mid-day. And because we've created so many tools, a decision-driven tool that we've designed specifically for labor planning, we've shifted our labor to those timeframes, understanding what has shifted in the customers' patterns and their routines. Non-Gaap EPS of $ 0.06 to $ 0.65 and non-GAAP EPS of - $ 0.46 Reflecting Material sales Deleverage Retail! You believe could have a question really on the U.S. or are you also making any overseas! 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