It was a happy holiday at Starbucks, but the company’s sales momentum could start to slow due to the coronavirus outbreak in China.
Starbucks said it had intended to raise its full-year earnings guidance Tuesday, but uncertainty about China put that on pause. Starbucks said it has already closed more than half of its stores in China due to coronavirus.
China’s 4,292 Starbucks stores brought in 10% of the company’s revenue during the October-December period, so the closure will affect earnings, the company said. But it’s not yet clear how much of an impact there will be. Starbucks had expected full-year revenue growth in the 6% to 8% range and same-store sales growth of 3% to 4%.
“We remain optimistic and committed to the long term growth potential in China,” Starbucks President and CEO Kevin Johnson said in a conference call Tuesday with analysts.
Starbucks shares fell 1.6% to $87.20 in extended trading following the earnings report.
Consumer remain confident in 2020
U.S. consumer confidence showed a strong gain in January, bolstered by continued strength in the job market.
The Conference Board said Tuesday that its consumer confidence index rose to a reading of 131.6 this month, up from 128.2 in December. Lynn Franco, senior director of economic indicators at the Conference Board, says the increase reflects more positive assessment of the current job market.
The Conference Board’s present situation index and its expectation index both showed gains in January. Consumer confidence surveys are closely followed for clues about whether households are in a buying mood. Consumer spending accounts for 70% of economic activity.
UAW reformers urge union change
A UAW group says it’s closing in on the support it needs from union locals to force a special convention that could lead to direct election of union leaders in response to anger over a long-standing corruption probe.
The group, Unite All Workers for Democracy, this week said 18 locals representing more than 40,000 workers have passed resolutions in favor of a special convention.
A key change being sought is a shift to direct election – “one member, one vote” rather than selection by delegates – of the union’s top leaders. The movement is fueled by anger at revelations from the federal corruption probe that has uncovered self-dealing and embezzlement by key union and auto company figures.
The group said it needs locals with a combined total membership of about 79,000 to pass resolutions in favor. The rules under the UAW constitution also require locals to be from at least five different states, which the release said the group has accomplished.