Starbucks profit falls on restructuring charges

by Eric Schroeder
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SEATTLE — Earnings at Starbucks Corp. fell 77% in the second quarter ended March 29, weighed down by $152.1 million in restructuring charges that included $102.7 million related to the closing of 123 company-owned stores. Net income in the second quarter was $25 million, equal to 3c per share on the common stock, down from $108.7 million, or 15c per share, in the same period a year ago.

Revenue for the quarter was $2,333.3 million, down 8% from $2,526 million during the same period a year ago.

Despite the lower earnings, Howard Schultz, chairman, president and chief executive officer, said the company is seeing signs of progress, especially in regards to its cost-cutting campaign, which delivered $120 million in savings during the second quarter, ahead of its goal of $100 million for the quarter. Starbucks expects to deliver $150 million in the third quarter and approximately $175 million in the fourth quarter.

"Our focus on delivering value while staying true to the premium quality and values of the brand is paying off," Mr. Schultz said. "Our recent introduction of Starbucks VIA Ready Brew is a notable case in point and is showing significant promise in multiple channels."

For the first six months of fiscal 2009, Starbucks had net income of $89.3 million, or 12c per share, down 72% from $316.8 million, or 43c per share. Sales were $4,948.5 million, down 7% from $5,293.6 million.

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