Starbucks reports first ever UK sales slump

25 April 2014 by
Starbucks reports first ever UK sales slump

UK sales at Starbucks slumped for the first time last year, as the global coffee chain got caught up in a row over tax avoidance.

Revenue fell to £3.4% to £399m (2012: £413m) for the 12 months to 29 September 2013, according to accounts filed at Companies House.

The drop in sales bucks a 16-year trend of strong growth for the UK subsidiary of the American business and comes despite the "company being supported by an improving economic environment", the document said.

But while sales fell, gross profit was up, rising 13% to £79.8m from £70.5m in 2012.

Starbucks, alongside other multi-national businesses, was publicly criticised by politicians for paying too little tax after reports in October 2012 that it informed the UK tax authority that its British business was loss-making while telling investors that the subsidiary was profitable.

Margaret Hodge, chair of the Commons public accounts committee, called for a boycott amid the media storm that followed, while Prime Minister David Cameron said that companies that avoided paying tax had to "wake up and smell the coffee".

The Seattle-based business agreed to pay £20m in tax over 2013 and 2014, the accounts said. It has already paid £15m and the company said it follows all tax rules.

Starbucks, which opened its first UK outlet on the King's Road, Chelsea in 1998, said the results reflected the closure of unprofitable stores rather than a weakness in the business.

The chain had 549 outlets at the end of the financial year, down by 44, but it opened 38 franchised and licensed stores as part of its strategy to close unprofitable sites on costly leases.

Starbucks to shift European HQ to UK after tax row >>

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