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Thu 13th Apr 2017 - Starbucks UK reports turnover and profit fall as like-for-likes slow to 1.0%
Starbucks UK reports turnover and profit fall as like-for-likes slow to 1.0%: Starbucks UK has reported a fall in turnover and profit as lower footfall led to like-for-like sales growth slowing to 1.0%. The company saw turnover fall to £379,863,586 for the year ending 2 October 2016 compared with £405,641,634 as it reduced its managed estate in favour of franchise openings. Pre-tax profit dropped to £13,382,364 compared with £34,216,739 the year before. Operating profit fell to £6,371,903 compared with £27,877,483 the previous year. Operating margin dropped to 1.4% (2015: 6.9%). The number of licensed and franchised stores increased by a net nine and 105 respectively. A total of 62 equity stores were sold or closed during the year. Like-for-like sales increased by 1.0% (2015: 3.8%). The company paid UK corporation tax of £6,718,880. Company owned stores produced £283,978,004 of income (2015: £335,840,309), licensed stores produced £26,746,220 of income (2015: £24,337,006) and franchised stores produced revenue of £69,139,362 (2015: £45,464,319). There was also a £6,710,469 profit from the disposal of fixed assets. The number of employees fell to 5,789 compared with 6,848 the year before. The company stated: “Starbucks in the UK has experienced significant economic and geopolitical headwinds this year, which affected sales, including slowing economic growth, impact of Brexit and ongoing security concerns contributing to weakening consumer confidence. The general consumer environment was more cautious than the prior year, with footfall noticeably down across the store estate leading to lower sales. The company continues to deliver on its successful strategy by transferring equity stores to licence and franchise partners. Profit before tax decreased to £13,382,634 (2015: £34,216,739), which was impacted by a lower footfall and a decrease to 1.0% in comparable (like-for-like) sales (2015: 3.8%). While external factors had a significant impact on the performance of the business during the period, measures continue to be taken to implement our strategy to balance the portfolio and continue to improve profitability, including the renegotiation of leases and the closure of unprofitable stores; continued focus on reducing costs; lower expenditure and administrative costs due to opening more franchise stores and an associated fall in headcount and thus staff costs of 10.9%. The company is cautious on the outlook going into 2017 due to persistent economic and geopolitical headwinds including slowing economic growth, the impact of Brexit and ongoing security concerns affecting consumer confidence. While these factors will impact comparable (like-for-like) sales per store, we expect the business to hold up well as we maintain focus on cost management alongside the strategic realignment of our portfolio.”

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