Starbucks closed 2,000 stores in China, warning of a strange outbreak of pneumonia in Wuhan could seriously affect financial results in 2020. Photo: CNN |
In the context of corona virus (nCoV) causing strange pneumonia causing 131 deaths and 4,000 confirmed cases in China, Starbucks said 2,000 stores out of 4,292 stores in the lucrative market. “this will stop working.
The announcement also stated that this is only a temporary plan, the world's leading coffee chain is continuing to monitor the disease situation and adjust the operating hours of all stores in the billion-dollar nation.
Starbucks shares plunged 1% in subsequent trading.
President and CEO Kevin Johnson said: “We remain optimistic and are committed to long-term cooperation in China.” He assured investors that Starbucks is prioritizing the health of its customers and employees and working closely with officials to help prevent the virus from spreading further.
According to John Culver, president of the company's international operations, disease progress is increasingly complex. Starbucks is considering closing some more stores.
Starbucks Chairman and CEO Kevin Johnson at the Annual General Meeting of Shareholders in Seattle, Washington (USA) on March 20, 2019. Image: Getty Images |
Earlier, Starbucks optimistically forecasted that the business activities this year will sharply increase thanks to the first quarter results. Sales at stores that opened at least a year in the US increased by 6%. Besides the US, China is one of the leading growth markets of Starbucks, accounting for 10% of sales in the first quarter of 2020. Meanwhile, sales at stores opened for at least 13 months in the country increased by 3%.
Starbucks plans to open 2,000 new locations worldwide, investing more heavily in developing a loyal customer strategy and a variety of online ordering programs, with the expectation of success in the second quarter and fiscal year 2020.
But the outbreak of the Wuhan virus could deal a blow to its 2020 financial prospects and face greater competition. Opponent Luckin Coffee recently surpassed Starbucks to become China's largest coffee chain.
The Wuhan pneumonia epidemic is attacking many countries, not only causing Starbucks but also a series of companies to close and restrict their interactions with the billion-nation nation. McDonald's, KFC, Pizza Hut, Disney … also stopped operating during this time.