Page last updated at 23:18 GMT, Tuesday, 21 July 2009 00:18 UK

Starbucks buoyed by cost cutting

Starbucks branch
Starbucks has been hit as consumers reduce spending

Coffee chain Starbucks has seen its quarterly results beat expectations after cutting costs.

The firm earned $151.5m (£92.1m) in the fiscal third quarter to 28 June, or 20 cents per share, up from a $6.7m loss - or 1 cent per share - a year earlier.

The increase in profit stemmed largely from lower costs, as same store sales fell 6% in the US and 5% in Europe.

The firm has been hit as consumers cut spending in the recession, prompting plans to close hundreds of stores.

The upmarket chain has faced increasingly stiff competition from other outlets which offers cheaper coffee - such as McDonalds.

The firm has reduced the workforce, as well as targeted more than 1,000 stores worldwide for closure. In addition it has reduced prices to lure customers.

The results acted as a fillip to the shares, sending them sharply higher in after-hours trade. Starbucks had seen it shares down 1.5% at $14.69, but after the session had ended they rose to $16 in extended trade.

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