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Starbucks Logs Another Sales Hit From Coronavirus
Topic of the day
The coronavirus is still weighing on Starbucks Corp., but the coffee giant expects to narrow its losses as the pandemic marches on. The coffee giant reported its steepest earnings per share losses in more than a decade as a result of lower sales and higher costs stemming from the pandemic. Global same-store sales plunged by 40% in the quarter ending in June, and the Seattle-based chain reported a loss of $704 million, down around 17% from a year earlier. But that was better than many analysts expected given the severity of the blow the pandemic has dealt to Starbucks, first in China, then across Asia, Europe and the U.S. The chain said it expects the worst effects of the virus to moderate in its current quarter and believes same-store sales will recover in the U.S. and China by its next fiscal year. The chain hopes to have opened hundreds of stores by the end of its fiscal year. Same-store sales are improving as the crisis continues, executives said. Shares of Starbucks rose 6% to $79 in after-hours trading.
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The Swiss stock market ended trading on Tuesday with a barely changed trend. The SMI could not claim more significant gains in its early trading. The SMI gained five points to 10,277, and among the individual stocks, the shares of luxury goods manufacturer Richemont came under significant pressure, losing 2.2 percent. Competitor LVMH had announced quarterly figures that were below expectations the previous evening. Profit from continuing operations in the first half of the year fell by around 70 percent to just under 1.7 billion. Here the market consensus was about 13 percent higher. In contrast, the 23 percent drop in sales affected analysts' estimates, according to retailers. The Swatch share lost 0.5 percent. The price was led by the Roche share, which gained 1.9 percent. Traders spoke of a recovery after the recent significant losses. Bank stocks were unable to maintain initial gains. UBS shares lost 1.8 percent and CS Group shares lost 1.2 percent.
European stocks are mixed as optimism over a potential Covid-19 vaccine and a $1 trillion US fiscal stimulus package offset concerns about a second coronavirus wave. The Stoxx Europe 600 and the FTSE 100 both rise 0.4% while the DAX is flat and the CAC-40 falls 0.2%. Games Workshop jumps 11% after the UK maker of fantasy war game miniatures reported a 10% rise in full-year profit. SIG Combibloc declines 7.2% after the Switzerland-based aseptic packaging provider lowered its full-year core revenue growth forecast. LVMH shares drop 4.8%, a day after the French luxury group said 1H profit plunged. Peugeot reported results for the first half of 2020. Revenue fell to 25.12 billion euros ($29.46 billion) in the first half from EUR38.34 billion in the same period a year prior due to the impact from the coronavirus pandemic. Net profit fell to EUR595 million from EUR1.83 billion. Shares trade 2.4% higher. Spain's Bankia has posted fee income of EUR300 million and lower costs of EUR429 million for the second quarter of the year. Its quarterly net profit amounted to EUR48 million. Shares in Bankia trade 2.7% higher at EUR1.12.
U.S. stocks slipped Tuesday after some large American companies reported weaker-than-expected earnings, raising new concerns about the fallout from the coronavirus pandemic. The Dow Jones Industrial Average fell around 205 points, or 0.8%, to 26379 at the 4 p.m. close of trading in New York. The S&P 500 lost 0.6%, while the Nasdaq Composite index declined 1.3%. 3M shares slid 4.9% after the manufacturer reported a sharp drop in sales in the second quarter, driven by weakness in its transportation and health care segments as businesses made fewer cars and planes and hospitals performed fewer elective procedures. McDonald's fell 2.8% after the burger chain reported a deeper-than-expected drop in profit, as fewer people ate at restaurants and the company spent millions of dollars to help keep its franchises operating. Harley-Davidson shares dropped 1% after the company said motorcycle sales fell by more than a quarter. Among gainers, shares of Pfizer rose 3.9% after the company's results beat expectations and it raised its full-year outlook. The U.S. has agreed to pay Pfizer and BioNTech nearly $2 billion to secure 100 million doses of their experimental Covid-19 vaccine.
Framed by a 1 percent stronger index in Shanghai and a 1 percent weaker index in Tokyo, the rest of the East Asian and Australian markets showed little change in trading on Wednesday.
U.S. government-bond yields fell Tuesday after tepid economic data and new signs of policy makers' struggles with the economic damage from the pandemic. The yield on the benchmark 10-year Treasury note fell to 0.581%, according to Tradeweb, from 0.609% on Monday. The 30-year bond yield declined to 1.223%, from 1.252%.
MS raises Roche target to 375 (370) CHF - Overweight
IR downgrades Repsol target to 7,40 (9,10) EUR - Hold
Bryan Garnier raises SAP target to 162 (137) EUR - Buy
HSBC raises Ceconomy target to 3,60 (2) EUR - Hold
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