Starbucks sees UK profits plunge 60% as Brexit and slowing economy hit sales
Starbucks has blamed Brexit and a slowing economy for a dive in UK profits, while pointing to weakening consumer confidence as sales sagged.
The US firm saw pre-tax profits collapse 60% to £13.4 million in the year to October 2016, according to accounts filed at Companies House.
Turnover also fell, from £405.6 million to £379.9 million.
"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 company said.
The coffee giant said the consumer environment was "more cautious" than the previous year, with footfall down "noticeably" across the store estate.
Like-for-like sales growth fell from 3.8% to 1% in the period.
Starbucks added that it was taking measures to mitigate the impact of falling sales, including closing unprofitable stores and reducing costs.
"We expect the business to hold up well as we maintain focus on cost management alongside the strategic realignment of our portfolio," the chain added.
Starbucks, which came under intense fire in 2012 for the low amount of tax it pays in the UK, said it shelled out £6.7 million in total taxes last year versus £8.4 million in 2015.
Martin Brok, president of Starbucks Europe, Middle East and Africa, struck a positive tone, hailing the company for recording a third straight year of profit.
He added: "Whilst there are undoubted challenges presented by a more cautious consumer environment, lower high street footfall, and adverse currency impacts, we are investing significantly to drive innovation in our food and coffee offering, and are greatly encouraged by our customers' response.
"We also continue to focus on strategically remodelling our store portfolio to reflect changing customer demands. The UK remains one of the most important EMEA markets for us and we will continue to grow where our customers want to find us."
Starbucks has 894 stores in the UK, with over a third company owned and the remainder owned by license and franchise partners.