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Starbucks Corp. shares fell late Tuesday after the specialty retailer reported quarterly earnings that beat Wall Street expectations and called the holiday season “one of the strongest” in its history, but spooked investors by saying the coronavirus outbreak in China is likely to hit its bottom line this year.
More than half of its stores in China are closed due to the deadly virus, Starbucks SBUX, -0.15% said.
Starbucks said it earned $886 million, or 74 cents a share, in the fiscal first quarter, compared with $761 million, or 61 cents a share, in the year-ago period. Adjusted for one-time items, the company earned 79 cents a share, compared with 75 cents a year ago.
Revenue rose 7% to $7.1 billion, compared with $6.6 billion a year ago.
Analysts polled by FactSet had expected Starbucks to report adjusted fiscal first-quarter earnings of 76 cents a share on sales of $7.1 billion.
“Building on solid business momentum from fiscal 2019, Starbucks performed very well throughout the first quarter, including one of the strongest holiday seasons in the history of our company,” Chief Executive Kevin Johnson said in a statement. “As a result, we are off to a strong start in fiscal 2020.”
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Same-store sales were up 5% worldwide, Starbucks said.
The company vowed to be “transparent with all stakeholders” in responding to the “extraordinary circumstances” in China.
“Currently, we have closed more than half of our stores in China and continue to monitor and modify the operating hours of all of our stores in the market in response to the outbreak of the coronavirus. This is expected to be temporary,” the company said.
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”Given the dynamic nature of these circumstances, the duration of business disruption, reduced customer traffic and related financial impact cannot be reasonably estimated at this time but are expected to materially affect our international segment and consolidated results for the second quarter and full year of fiscal 2020.”
Starbucks will update its fiscal 2020 guidance whenever it can “reasonably estimate the impact of the coronavirus,” it said.
Starbucks reported a global net store growth of 6% year-on-year, led by a 16% net store growth in China. China comparable-store sales were up 3%.
The company made waves last week when it announced it would add plant-based menu options as part of a larger commitment to sustainability. It announced oatmilk lattes earlier this year.
Starbucks shares have gained about 33% in the past 12 months, outperforming the S&P 500 index SPX, +1.01% and the Dow Jones Industrial Average DJIA, +0.66% , which have gained 24% and 17% in the same period.
