Starbucks is faced with challenges as it closes down about 2,000 locations in China amid fears of the coronavirus outbreak. With China being its second-largest market after the US, having nearly 4,300 stores, the impact on its financial performance is imminent.
The escalating death toll and the rapid spread of the virus have led to a wave of actions by various global companies. Many are evacuating their foreign employees from China and extending their Lunar New Year shutdowns. As of Friday afternoon in Beijing, the number of confirmed deaths from the coronavirus has exceeded 213, with over 9,000 confirmed cases in the country.
Initially, Starbucks had planned to revise its profit outlook for 2020 upward based on a stronger-than-expected performance in the first quarter. However, due to the virus outbreak, the company has chosen to retain its original forecast. Since China makes up 10% of Starbucks’ worldwide revenue, the closures are likely to have a considerable impact on their financial results. The company’s supply chain is also feeling the effects of the disruptions caused by the virus prevention measures and closures.
Many companies, including Starbucks, are taking preventive measures such as evacuating employees from Wuhan, the epicenter of the outbreak, and urging staff in China to stay at home to contain the virus’s spread.
