Starbucks sees profits evaporate

Starbucks is struggling to turnaround its fortunes

Starbucks has seen its fourth-quarter profit almost wiped out by the cost of closing under-performing outlets and falling customer numbers.

Reporting its global results for the three months to 28 September, its net profits totalled $5.4m (£3.5m), down from $158.5m a year earlier.

The US coffee giant said $105m of the fall was due to the cost of its continuing restructuring work.

However, same-store sales were down in the US, falling 8% from a year earlier.

Fourth-quarter revenues were up 3% to $2.5bn.

Healthier portfolio

Starbucks announced back in the summer that it would close 600 underperforming US outlets and 61 in Australia, as part of 1,000 job cuts, as it continued efforts to turnaround its fortunes.

I am optimistic we are well positioned to weather this challenging economic environment Starbucks chief executive Howard Schultz

The firm's efforts to return to growing sales and profits are being led by founder and chief executive Howard Schultz who returned to lead the company at the start of this year.

"With a re-architected cost structure...we began the new fiscal year with a healthier store portfolio that will allow for operating margin expansion," he said.

He said the firm would achieve this growth in 2009 "despite a global economic environment which shows no immediate signs of improvement".

Mr Schultz added: "I am optimistic we are well positioned to weather this challenging economic environment".