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Starbucks Says a Full Profit Rebound Is Over a Year Away

By Demitri Kalogeropoulos – Jul 29, 2020 at 1:26PM

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Growth trends are improving, but a complete recovery will take time.

Consumer demand is still shifting quickly, and new COVID-19 outbreaks are forcing rapidly implemented operating changes, but Starbucks (SBUX 3.36%) is now finally able to estimate when its business will be back to its normal growth cadence.

Executives detailed their rebound predictions in a conference call with Wall Street analysts following the release of the chain's fiscal third-quarter report, which showed a 41% plunge in comparable-store sales in the U.S. and a 37% decline in international markets.

A woman holding a to-go coffee.

Image source: Getty Images.

The U.S. segment should return to sustainable sales growth by the end of the second quarter of 2021, or in about nine months, management said. Revenue gains will be aided by Starbucks' push into contactless fulfillment options and additional drive-thru services even as customer traffic stays pressured in many traditional gathering places. A full profit rebound should trail that growth recovery by about two quarters, executives estimate, putting a return to normal right around late September 2021.

The coffee giant said it would adjust that timeline as needed to account for changing operating conditions over the next few quarters. But the most immediate step in the rebound path calls for a return to profitability in the current quarter, following Starbucks' $678 million loss in fiscal Q3.

Demitrios Kalogeropoulos owns shares of Starbucks. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool has a disclosure policy.

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