Starbucks (NASDAQ:SBUX) outlined its outlook for its third and fourth quarters as well as fiscal year 2020 on Wednesday, and although it expects improvements, the short term doesn't look too great.

U.S. comps are low, but increasing

Starbucks has opened 91% of U.S. locations as of the end of May, mostly with to-go service. U.S. comps are up from a low of a 63% decrease in April to a decrease of 43% in May, with sales down 32% during the last week of May. Over 90% of orders utilized the drive-thru or mobile order and pay options in the last week of May.

Starbucks worker serving a customer in drive-thru.

Image source: Starbucks.

Product mix has remained stable throughout the pandemic, but the average ticket has increased as customers go out less and order more per order.

Starbucks expects comps in the U.S. and the Americas to decrease 40% to 45% in the third quarter, falling from a decline of 3% in the second quarter, and then to improve to a 10% to 20% decline in the fourth quarter. It expects a 10% to 20% decrease for full fiscal 2020.

On track in China

In China, where 99% of stores are operating -- 90% at full capacity -- sales are improving. Of those open stores, 70% offer full seating according to government regulations. After falling 90% in March, sales were down 35% in April and 21% in May, with a decrease of 14% in the last week of May. Starbucks opened 57 new locations in China in April and May and 281 net new stores in fiscal 2020 for a total of more than 4,400. It plans to open 500 new locations in 2020.

Starbucks expects comps in China to decrease to a range of 20% to 25% for the full third quarter and to move toward flat by the fourth quarter for a fiscal year decrease of 10% to 20%.

Overall improvements

The company expects international sales to fall 40% to 45% in the third quarter and move up to a decrease of 10% in the fourth quarter for a fiscal year decline of 20% to 30%.

Starbucks expects a loss per share of $0.64 to $0.79 in the third quarter, earnings per share of $0.11 to $0.36 in the fourth quarter, and EPS of $0.33 to $0.73 for the full year.

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