Starbucks Prepares to Gradually Reopen U.S. Cafes in May after Coronavirus Shutdown
Starbucks Corp. (SBUX) is preparing to gradually open a “significant” number of stores throughout May, citing “progress” in the battle to contain the coronavirus pandemic.
The coffee shop chain, which on March 22 shut down its U.S. and Canadian cafes, is getting ready to gradually resume operations starting on May 4 as it sees states beginning to relax their stay-at-home orders. Starbucks will continue to pay its employees an additional $3 per hour through the end of May.
“There is evidence many markets have in fact “flattened the curve” and are now beginning to see a decline in the number of new confirmed COVID-19 cases,” Kevin Johnson, chief executive officer at Starbucks said in a letter to employees. “This is prompting many to define the next steps. ”
Johnson added that the coffee giant chain will use its experience in China, where 95% of its locations reopened as a pilot to help in the transition to a new “monitor and adapt” phase. According to Starbucks plan, some of its cafes will continue as drive-thru only, while others will reopen for “to-go” ordering subject to guidance from government and health officials.
Last week, Starbucks withdrew its full-year guidance amid expectations that third-quarter negative financial impacts related to the coronavirus pandemic will be significantly greater than they were in the second quarter and will also extend into the fourth quarter. While the Seattle-based chain has suspended its share repurchase program, it does not expect to reduce its quarterly dividend.
Wall Street analysts take a cautious stance on the stock assigning a Moderate Buy consensus rating split into 16 Holds and 10 Buys. They $78.87 average price target reflects a potential 7% yield in the next 12 months. (See Starbucks stock analysis on TipRanks).
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