Starbucks Inc. on Wednesday announced it was allotting $10 million to coronavirus-related economic recovery programs for workers in corporate and licensed stores around the world.
Part of the initiative will be the latest Starbucks Global Partner Disaster Relief Program which will offer one-time grants to those in need. A portion of the $10 million commitment will also benefit the existing CUP Fund for the company which has a similar objective.
The money would also help finance projects for Starbucks markets around the world to support workers. "We feel it is our duty during this very challenging period to provide additional support for partners facing unforeseen financial distress wherever they are," Starbucks chief partner officer Lucy Helm, said.
Helm added that they are proud to be a "catalyst for a first-of- a-kind global funding project" to further prove to their Starbucks partners that they are united in this.
Meanwhile, Starbucks forecast a 47 percent drop in second quarter earnings on Wednesday, junked its full-year outlook and warned that the financial impact from the pandemic would extend into the final three months of the year.
The global coffee chain also disclosed it will temporarily suspend its share buyback plan and take measures to minimize costs, but keep its quarterly dividend on hold.
Starbucks stressed it now estimates to post earnings of around 28 cents per share in the second quarter, reflecting the effects of the revenue lost for the period as well as higher expenditures. In the year-earlier quarter, the company had posted 53 cents pershare.
But U.S. sales for the Seattle-based chain started to drop by middle of last month, and worsened as it shifted to serve only through drive-thru and delivery. Sales from the same store fell between 60 percent and 70 percent in the last week of March.
In China, Starbucks' second biggest market, same-store profits were down by half during the second quarter. Starbucks' cited temporary shutdowns, limited hours and the decline in customer traffic.
Same-store sales were improving since falling 90 percent in mid-February as China slowly returns to a new normal. In the last week of March, same-store sales declined by 40 percent in the mainland.
While these developments are promising for the company, Starbucks chief executive officer Kevin Johnson and chief finance officer Pat Grismer wrote in a letter to stakeholders that they are hopeful they will continue and that future progress will not be "linear and will be influenced by the current external circumstances and local safety guidelines."
