Profits triple at Starbucks

Starbucks has posted earnings of $242 million for the last quarter of 2009, up from $64 million during the same period last year.  Same store sales in the US over the period rose by four percent from $2.62 billion to $2.72 billionÔÇötheir first rise in over two years. The strong results from the worldÔÇÖs largest coffee chain beat market expectations. The company has attributed much of the success to cost-cutting measures and the introduction of new lower priced coffees to win back customers tempted away to cheaper rivals. Cost-cutting measures included closing under-performing stores and cutting thousands of jobs. Too many branches had resulted in stores taking businesses from each other and the exclusivity of the brand being compromised. The company also said it has experienced strong sales of its Via instant coffee and a rise in holiday coffee sales in international markets. Via was rolled out in late September to Starbucks stores across the US and Canada, following testing in Seattle, Chicago and London, UK, for a period of several months. Holiday sales were particularly strong in Canada, with strong traffic gains in the UK and stable growth in the Chinese market. The Seattle-based company's turnaround was led by its founder Howard Schultz, who returned to the role of chief executive in January 2008. At that point in time, Starbucks had just posted its first quarterly decline in the number of transactions at stores in the US. As the chain opened a record 2,571 stores in 2007, the one time growth stock lost 42 percent of its value. The company then suffered from a decline in consumer spending on what were deemed to be luxuries, such as Starbucks coffee, as well as competition from McDonaldÔÇÖs when it began serving espresso. As it fought back, Starbucks began to conduct customer research surveys, as well as running its first major advertising campaign. It also reduced the number of suppliers it uses and introduced operational efficiency measures in its stores. Commenting on the results in a conference call to analysts, Schultz said: ÔÇ£We are aware of the profound economic uncertainty that exists in the world. To continue to succeed, we must continue to improve and innovate.ÔÇØ Starbucks now plans to open about 100 new US locations and 200 international sites over the coming year. The chain has more than 16,000 locations worldwide.