Yahoo Finance Starbucks Sales Fall - First Time In 16 Years
Starbucks (Berlin: SRB.BE - news) ' turnover dropped last year for the first time, in the wake of revelations about its corporate tax practices.
Sales for the year to September 29 were £399m, a decline of 3.4% compared to the previous year.
The company said the decline, the first since it started UK operations 16 years ago, was due to the closure of unprofitable outlets and not the result of other reasons.
It reduced its average UK workforce by 11.6% in the financial year, to 7,726.
Starbucks was able to increase its gross profit by 13% to £79.7m, before deductions of £100.5m were taken into account.
Its pre-tax loss was £20.4m in the period, down from the £30.4m recorded in the 2011-12 financial year.
It said the £10m fall in the pre-tax loss was largely due to the rise in gross profits. Its staff costs dropped £13.5m in the tax year compared to the previous year.
In a statement given to Sky News, Starbucks said: "This has been another quarter of strong growth for Starbucks across the EMEA region, with profitability more than tripling year-on-year and revenue growth of 13% the highest in two years."
In accounts filed with Companies House the firm said of its British operations: "The company is being supported by an improving economic environment in the UK which is predicted to continue through 2014.
"This in turn is expected to lead to an increase in comparable (like-for-like) sales per store and, alongside the realignment of our portfolio, a further reduction in the loss before tax next year."
The company's accounts started on September 30, 2012 and in October and December of that year key executives were grilled by MPs about multinational corporate (MNC) arrangements.
Revelations about royalty, licensing and transfer pricing structures used by MNCs to minimise UK tax burden were explored by the Public Accounts Committee.
Seattle-based Starbucks was quizzed on why it remained a loss-making business for tax purposes while telling investors it was profitable.
Groups such as UK Uncut urged boycotts of Starbucks and organised protests outside stores, and the company's website blog was flooded with hundreds of critical comments.
But the company said the latest sales drop was not related to the 2012 tax furore.
Responding to the widespread criticism at the time it offered to pay a 'voluntary' £20m in tax over two years, and has already given £15m of that to HM Revenue and Customs.
It also dropped total director remuneration by almost a fifth to £886,000, with the highest paid executive's emolument falling by more than half to £268,582.
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