Starbucks has reported that pre-tax profits have plummeted by 97% over its fourth quarter due to the consumer slowdown. The coffee shop chain also predicts that the first quarter of its financial year will be the “toughest”.
Its net profits for the three months to September 28 are down to £3.5m from £100m for the same period last year. The US-based company says that the fall is attributed to restructuring work and a fewer customers.
Revenue was up by 3% to £1.58bn with sales up 10% from the same period in the previous year to £6.6bn on a like for like basis.
Howard Shultz, Starbucks founder and chief executive says that while there are no immediate signs of improvement, Starbucks is “well-positioned to weather the challenging economic environment” in 2009.
The company is cutting back on international expansion as part of a cut back following the profits fall. Meanwhile, it has shut down 600 underperforming outlets and 61 Australian were also cut.