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Starbucks shares rise as investors look beyond the company's loss

Starbucks shares rise as investors look beyond the company's loss
Starbucks shares rise as investors look beyond the company's loss

The ongoing coronavirus pandemic, which started at the end of last year, has brought the entire world to its knees. It has led to the practice of social distancing while governments have enforced lockdowns that significantly affected businesses and economies all around the world.

Starbucks Corporation was among these firms that faced the brunt of the pandemic and witnessed a loss of a staggering 40 percent in its store sales in the fiscal third quarter. However, the coffee chain is optimistic about the future as it looks to raise adjusted earnings for the fiscal fourth quarter.

Executives believe that the coffee chain's sales will recover in the US and China by the end of its fiscal first and second quarters. However, the assumption demands that there are no new infection waves or any major economic disruptions.

Meanwhile, the shares of the company rose more than 6% in extended trading. Starbucks reported the loss per share at 46% and revenue loss at USD 4.22 billion for the quarter that ended June 28.

The third-quarter net losses of Starbucks stayed at $678.4 million or 58% per share, down from USD 1.37 billion or USD1.12/share compared to the previous year. Pandemic expenses, such as paid barista leave and extra protection measures, have weighed on its earnings. With the exception of goods, Starbucks lost 46 cents per share, less than a loss of 59 cents per share loss expected by analysts.

Net sales fell by 38 percent to $4.22 billion and were beyond $4.07 billion estimates. The corporation predicts a $3.1 billion loss of sales as a result of the pandemic.

During the quarter, worldwide same-store sales decreased by 40 percent. At least 13 monthly transactions on locations dropped 51%, but customers spent more on their orders, sending an average check-up by 23 percent.

Its U.S stores saw a decline of 40 percent in the quarter. It also transitioned the stores to drive-thru and delivery and reopened locations with reduced hours and limited operations.

Starbuck's second-largest market China saw the decline at 19 percent for the same-stores and about 12 percent for the delivery.

Source Credit – https://www.cnbc.com/2020/07/28/starbucks-sbux-q3-2020-earnings.html