What happened
Shares of Starbucks (SBUX 0.47%) were trading lower on Friday, as investors grappled with the implications of longer-than-expected shutdowns in response to the COVID-19 pandemic.
As of 2 p.m. EDT, Starbucks' shares were down about 4.5% from Thursday's closing price.
So what
While most companies with retail chains have shuttered their stores, CEO Kevin Johnson has tried to walk a fine line. He has kept Starbucks' locations in the U.S. and Canada open (as local authorities allow), but with takeout service only. And he's included scaled-up sick-leave benefits and extra pay to try to ensure that workers stay safe (and that they keep showing up).
Image source: Starbucks.
Many retail chains, including Starbucks, first announced their plans to temporarily close stores or limit service in mid-March, with the expectation (or at least the hope) that the closures would last for just a couple of weeks.
But now that we're nearing the end of March, it looks likely that most retailers in the U.S. and Canada will have to stay shut down for at least several more weeks.
Put another way, all of them, including Starbucks, will be losing more sales revenue than their investors had initially expected.
Now what
For long-term-minded investors who are comfortable with consumer discretionary stocks, Starbucks is still an appealing buy. It remains a well-run company, albeit one dealing with a uniquely difficult situation. Johnson has so far done a good job of balancing the need to keep employees safe and reassured with the need to keep generating some revenue while much of North America is shut down.
Johnson has also done a good job of keeping investors updated. While it's not at all clear how the pandemic (and, importantly, the post-pandemic recovery) will play out, it's clear that Starbucks is doing what it can to take care of business now.
