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After reopening most of its U.S. store locations earlier this month, Starbucks recovered between 60 and 65 percent of domestic sales, compared with those reported this time last year, CEO Kevin Johnson said Thursday.
In a letter addressed to Starbucks' partners that appears on the corporation's website, Johnson shared positive financial updates with regard to stores in the U.S. and China, where its establishments have resumed modified operations following closures in response to the coronavirus outbreak.
"Over the past two weeks in the U.S., we are seeing a positive response from customers as they adapt their daily rituals to this 'now normal,'" Johnson wrote. "We have now regained about 60-65 percent of prior year comparable U.S. store sales while reopening under modified operations and with reduced hours. In China, we have seen progress as well and our comparable store sales have reached about 80 percent of prior year levels."
About 85 percent of Starbucks stores reopened across the U.S. during the first week of May, and Chief Financial Officer Patrick Grismer said the company anticipates another 5 percent will follow in early June. Starbucks began reopening stores in China several weeks before.
Acknowledging the economic downturn caused by the pandemic and the losses to Starbucks reflected in its most recent earnings report, Johnson said in Thursday's letter that stores will be reduced to limited hours until consumer traffic increases further. According to its annual financial report, Starbucks' net earnings totaled nearly $3.6 billion in 2019.
Johnson's sales update came shortly after Starbucks issued requests for rent relief to its U.S. landlords, citing financial concerns due to the pandemic, multiple media outlets have reported. According to The Seattle Times, which published the news first, Starbucks Chief Operating Officer Roz Brewer asked for "concessions to support modified operations and adjustments to lease terms and base rent structures" in a May 5 letter. Brewer requested that the adjustments take effect June 1 and last one year, according to the Times.
Starbucks did not respond to Newsweek's request for comment on the letter before publication.
Reports from multiple outlets have noted that landlords who received the letter were not keen to comply with the rent request. Leon Brooks, a landlord in San Clemente, California, told the Times he responded to Starbucks with his own letter, which read, "I am highly disappointed, disgusted and angry. Shame on you."
Grismer discussed potential changes to agreements with Starbucks landlords during an April 28 conference call to discuss the company's most recent earnings report, which covered the first three months of 2020.
"We are having ongoing conversations with our landlords in various markets regarding what may be commercially reasonable lease concessions in the current environment," he said. "We've not yet confirmed those arrangements, and it's really premature to indicate what that relief may look like, but it is something that we are pursuing."
