David Fingold discusses Costco
Early looks from Starbucks Corp. and Costco Wholesale Corp. into their coronavirus-era businesses suggest that U.S. consumers may not be ready to turn back to their old spending ways as soon as governments give the all-clear sign.
Starbucks sales cratered at the end of March. Its experience in China, which is now emerging from forced social distancing, showed that customers were hesitant to return at first. The Seattle-based chain said that while it had seen seven straight weeks of same-store sales improvement in China, that measure was still 42 per cent below what it was a year earlier. Based on this, Starbucks said that it’s facing six months of pain.
Costco, meanwhile, posted double-digit gains in March, though these were not as much as expected. While restrictions on customer traffic, store hours and some departments tamped down sales, analysts noted that same-store sales of clothing and household items fell, suggesting that people were just focused on the basics right now.
With other retailers of staples taking similar measures to prevent crowds from forming, and grocery delivery services saturated in major markets, it’s safe to say that sales may be hitting a ceiling.
And Starbucks’s recovery pace in China may be a warning for investors that it will be a long slog back from the coronavirus in the U.S., Bloomberg Intelligence restaurant analyst Michael Halen said.
“I don’t think investors are currently pricing in negative 42 per cent seven weeks from now,” he said.