Starbucks faces Wall Street after race crisis

Starbucks will face Wall Street Thursday for the first time since it was embroiled in a PR crisis over the arrests of...

Posted: Apr 26, 2018 3:17 PM
Updated: Apr 26, 2018 3:17 PM

Starbucks will face Wall Street Thursday for the first time since it was embroiled in a PR crisis over the arrests of two black men at a Philadelphia store.

Two weeks ago, Rashon Nelson and Donte Robinson were arrested at Starbucks for trespassing. The two men did not order anything, but they asked to use the bathroom while they waited for a meeting. A white store employee called 911 minutes after they arrived.

Video of the arrest went viral, sparking protests and calls for boycotts. Starbucks CEO Kevin Johnson publicly apologized for the arrest and flew to Philadelphia to meet privately with Nelson and Robinson. Johnson and top Starbucks officials, including former chief executive Howard Schultz, remained in Philadelphia for days to meet with religious and community leaders in the city.

Related: Starbucks CEO on arrests at Philadelphia store: 'They didn't deserve that'

The store employee who called police is no longer with the company. Starbucks has not disclosed the terms under which she left.

Starbucks won praise for its decision last week to close its 8,000 company-owned stores in the United States for one afternoon on May 29 to provide racial bias training to about 175,000 workers. The training will be developed with guidance from experts including former Attorney General Eric Holder and Sherrilyn Ifill, the president of the NAACP Legal Defense and Education Fund.

Related: Starbucks has a bold plan to address racial bias. Will it work?

Analysts expect Starbucks to report $5.9 billion in sales for its quarter from January to March, up from $5.3 billion at the same time last year.

The costs from protests and the May 29 training won't show up until next quarter, but analysts will probably grill Starbucks on how much they expect to lose in sales from the closure and whether Starbucks' reputation has taken a hit from the national uproar. Wall Street may zero in on the impact in the Philadelphia area, some analysts believe.

Related: How major companies handle and botch public relations crises

Analysts will also watch how much Starbucks' sales are growing and whether the chain is attracting new customers at later hours of the day. Last quarter, Starbucks reported sluggish growth at stores that have been open for at least a year because of a subpar holiday lineup.

Starbucks' stock is down 3% since the arrests.

The chain hopes to replicate Facebook's performance following its PR crisis over a massive data scandal.

Facebook shares popped 7% after trading hours Wednesday after the company said it reversed a decline in daily active users in the United States and Canada. Facebook posted nearly $12 billion in revenue for the first three months of 2018, up nearly 50% from the same period a year ago.

-CNNMoney's Paul R. La Monica and Seth Fiegerman contributed to this story.

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