US coffeehouse giant Starbucks reported second quarter profits of 109 million dollars, or 15 cents per share, a drop of 28 per cent from the 151 million dollars in the year-earlier period, the dpa reported.
Revenue rose 12 per cent to 2.53 billion from 2.3 billion dollars in the second quarter of 2007.
In a statement Starbucks chief executive Howard Schultz said the profits drop resulted from costs related to the company's turnaround, calling 2008 a transitional year and predicting that growth would return in the long term.
Starbucks said the weak economy had caused a mid-single-digit drop in same store sales compared to last year. But the rising costs of dairy products and changes in store organization were the main causes of the lower than expected revenues.
Starbucks stock has plunged more than 46 per cent over the past year due to concerns about the weak economy and increased competition. That prompted Schultz to rein in spending at the company and cut back on the number of new store openings.
"Fiscal 2008 is a transitional year for Starbucks and, while our financial results are clearly being impacted by reduced frequency to our US stores, we believe that as we continue to execute on the initiatives generated by our transformation agenda, we will reinvigorate the Starbucks experience for our customers, and in doing so, deliver increased value to our shareholders," Schultz said.