The company said in a letter to stakeholders filed with the SEC that comparable store sales in China were down 78% during the month of February. It said it sees a “COVID-19-related headwind of approximately $400 million to $430 million” vs. prior expectations for China revenue.
"The business disruption related to COVID-19 in China is expected to have an adverse impact to Starbucks GAAP and non-GAAP earnings per share (“EPS”) for Q2 FY20 in the range of $0.15 to $0.18," the company said in the letter.
Starbucks said it couldn’t yet estimate the financial impact from store closures and reduced foot traffic in Japan, South Korea and Italy.
The coffee retailer said there were signs of improvement in China in the final week of February.
On Wall Street Thursday, stocks finished sharply lower after coronavirus infections in the U.S. rose and California declared a medical state of emergency after the state's first death from the virus.
Starbucks is currently expected to report adjusted net income of $681.9 million, or 58 cents a share, on sales of $6.5 billion in the current quarter.
In the same period a year ago, the company posted earnings of 60 cents a share on sales of $6.3 billion. It reported net income of $760.6 million.
The stock has fallen 10.1% since the company last reported earnings on Jan. 28.
On Thursday, the stock fell $3.48, or 4.4%, to $76.19 amid a broad market selloff on a surge in U.S. coronavirus cases. Shares were slightly higher in after-hours action.
In the upcoming quarter, analysts are forecasting adjusted net income of $954.7 million, or 81 cents a share, on sales of $7.2 billion.
For the year, analysts project revenue of $28 billion.
The company said it expects most of its stores in China to be reopened by the end of the current quarter.
Starbucks is a holding in Jim Cramer's Action Alerts PLUS member club