Starbucks says Brexit vote hit UK profits

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Starbucks logoImage source, Getty Images

Starbucks has reported a sharp fall in profits at its UK business, which it has blamed on a slowing economy and the effect of the Brexit vote on consumer confidence.

The coffee chain said its pre-tax profit in the UK fell 61% to £13.4m in the year to 2 October.

Starbucks' corporate tax bill also fell from £8.4m to £6.7m.

The US firm has faced heavy criticism for the amount of tax it pays in the UK.

"Starbucks in the UK has experienced significant economic and geopolitical headwinds this year which affected sales, including slowing economic growth, [the] impact of Brexit and ongoing security security concerns contributing to weakening consumer confidence," Starbucks said.

In November, the coffee chain reported record annual profits on a global basis, but that was mainly down to a big rise in sales in the Americas.

In the UK, growth in like-for-like sales - which strip out the impact of new stores - slowed to 1%, down from a rate of 3.8% in the previous year.

Starbucks said that UK investment and restructuring costs had also affected its profits.

Martin Brok, the president of Starbucks in Europe, the Middle East and Africa, said: "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."

The coffee giant had a reduced tax bill after its profits fell.

In 2012 Starbucks said it would pay significantly more in tax after a public outcry about its UK corporate tax bill.

Before 2012, the company paid just £8.6m in 14 years of trading in the UK, despite sales worth billions of pounds.