Slowdown for Starbucks as 600 stores are closed

08 August, 2008
Page 10 
Starbucks has reported a net loss of $6.7m (£3.4m) in the three months to the end of June, compared to a $158.3m (£79.9m) third-quarter profit last year, against a background of store closures and plans to cut 1,000 office jobs in the US.
Total revenue rose by 9% to $2.6bn (£1.3bn), compared with $2.4bn (£1.2bn) for the third quarter of 2007. Its "lower-than-expected revenue growth" reflected a deterioration in the US, which contributed 76% of total net revenue.Meanwhile, international revenue grew by $103.6m (£52.3m) - 2% - to $535.6m. (£270.4m). But a company statement said: "International revenue growth was dampened somewhat by a slight decline in traffic in the UK, along with slower sales momentum in Canada."The company has announced the closure of 600 "underperforming" stores in the US and 61 of its 84 outlets in Australia. Restructuring charges connected to the US closures amounted to $167.7m. (£84.7m)Howard Schultz, chairman, president and chief executive, said: "The store closures and organisational restructuring... resulted from rigorous evaluations of the entire business."----=== Consumer Tracking ===== Shopping habits == Despite increasing fears of a recession, new research suggests a significant percentage of consumers say they will spend more on food and drink from specialist or local retailers. A poll conducted by GfK NOP on behalf of retail consultancy him! revealed that, of 1,000 adults asked, 19% expected to spend more in this area and 16% would spend less.According to the survey, 84% of the population were concerned the country would enter a recession, compared with 57% in March this year. It also showed that 27% of adults would spend less on food and drink from fast food outlets, with only 6% prepared to spend more.One trend in particular is the increasing number of people who said they would be spending more in discount supermarkets, such as Aldi and Lidl. Only 14% said they would spend more in March 2008, which rose to 22% in June.The findings of the poll also suggested consumers would be cutting down on restaurant meals, although the figures showed that they wouldn't necessarily switch to take-away options, but would instead buy more food from supermarkets.



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