Starbucks chain stays on the boil

COFFEE bars chain Starbucks is racking up growth of between 8% and 9% in like-for-like British sales despite speculation that the steam is coming out of the High Street market.

Speaking as Seattle-based Starbucks reported a global annual profit jump of 26% to $268.3m (£159m), UK managing director Cliff Burrows said he would open 50 stores in the coming year.

The opening programme will include areas in the suburbs and around Knightsbridge, where Starbucks is under-represented. The company said the London market was not saturated.

The group operates 380 bars across the UK, 50 of which opened in the past 12 months. 'We did 50 in the last year, and will do 50 a year for the foreseeable future,' Burrows said.

The new stores are less likely to be in the landmark positions, such as Oxford Street, taken by Starbucks in its early years.

Like-for-like sales growth is thought to be similar to that at Whitbread's 300-strong chain Costa, but it outpaces London Stock Exchange-listed Caffe Nero's 4%.

Caffe Nero, however, is the only one of the three that has to report figures in the City.

Burrows, who joined from retailer Habitat two years ago, forecast his UK operation would move into profit in the next 18 months. 'We're now confident the model works,' he said. 'We have a strong platform for growth.'

This year's UK turnover and losses are incorporated into the American parent company's results, but the figures on the British financial performance are impossible to gauge. It is weeks late filing its accounts for 2002 with Companies House, triggering speculation of big writedowns on the value of its estate.

Analysts say Starbucks overpaid when the group bought its way into the UK with the takeover of Seattle Coffee Company-in 1998. It paid £50m for 56 coffee houses.

Burrows declined to comment on the current value of the chain, but he is believed to be reviewing its worth store-by-store with a view to hefty writedowns. The current strong trading means the writedowns could be less than originally expected.

Starbucks US chief executive Orin Smith said net revenue across the global business in the fourth quarter to 28 September alone was $1.1bn, from $865m a year ago.

He said new peppermint, toffee nut and malt-flavoured drinks had helped drive sales, and highlighted China as a focus for international expansion.