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Starbucks sees profits grow as sales climb

21 April 10 21:29 GMT

Boosting sales and grinding down costs has seen coffee chain giant Starbucks exceed forecasts by increasing profits eight-fold this year.

The Seattle-based firm earned $217.3m (£141m) in the first quarter to 28 March. In the same period in 2009, one-off charges meant it made just $25m.

Starbucks has been focusing on winning back business in the US, where sales in stores open at least a year grew 7%.

The results pushed the firm's shares higher in after-hours trading.

'Dramatic transformation'

Starbucks has cut thousands of jobs and shut hundreds of under-performing stores over the past two years to trim costs.

It has also introduced new, lower price coffees to win back customers tempted away by cheaper rivals.

"Starbucks' second-quarter results demonstrate the impact of innovation and the success of our efforts to dramatically transform our business over the last two years," said chief executive Howard Schultz.

Mr Schultz has led the firm's turnaround since returning to the top job in January 2008.

He admitted at the time that the company had opened too many branches, which had resulted in stores taking business from each other, and the company's upmarket brand image being tarnished.

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