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June 21, 2021

Starbucks UK receives tax credit in 2020 despite US parent earning profit

Starbucks secured a tax credit of $6.1m (£4.4m) in the UK because of losses it suffered in 2020 due to the Covid-19 pandemic, despite the coffee chain’s US parent company earning a profit of $1.2bn (£870m) during the same period.

Starbucks secured a tax credit of $6.1m (£4.4m) in the UK because of losses it suffered in 2020 due to the Covid-19 pandemic, despite the coffee chain’s US parent company making a profit of $1.2bn (£870m) during the same period.

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  • How can your company survive and thrive in a high inflation environment?
Enter your details here to receive your free whitepaper and ready your business for these increasingly uncertain times.
by GD50 Custom
Enter your details here to receive your free Whitepaper.

Due to the pandemic, Starbucks UK had to temporarily close all of its 935 outlets. The temporary closure in the UK had taken a toll on its total revenues, which stood at £243m, a decline of 32.7% in 2020.

The UK arm reported that it lost £41m during the year to the end of September 2020. Loss on Ordinary Activities before tax surged 83% from 2019.

According to the UK accounts, a gross profit of £32m was recorded for the year, down by 53.7% impacted by labour costs remaining broadly neutral.

The firm stated that although it was forced to suspend trading, it did not furlough any of its 4,300 workers.

Post-year end, 400 new roles have been recently announced across the UK.

The UK arm stated that retail stores continued to pay rent, although it entered into lease negotiations as a result of mandatory lockdowns.

Starbucks EMEA saw its total aggregated revenues touch $168.0m, down 31.6% due to Covid-19 related store closures and a decrease in royalties revenue.

Its aggregated gross profit stood at $80.9m, down 26.5% due to restructuring costs and lower service costs. The aggregated profit on ordinary activities before tax was  $104.5m, down 38.8%, as a result of an aggregated operating loss of $76.9m across EMEA Companies.

The total tax expense reported by Starbucks EMEA was $3.1m, as against $11.6m in 2019, due to the increased operating loss.

Starbucks EMEA fast-tracked the rollout of convenience store formats and digital infrastructure to meet the new customer need due to the pandemic.

Despite the challenges posed by the pandemic, Starbucks EMEA has seen continued licensee store growth in the Middle East and Turkey, including the opening of 167 new stores.

The quick roll-out of drive-thru grew sales by 24% in the Middle East as against 2019.

Free Whitepaper
img

What is the impact of historically high inflation on the UK consumer landscape?

The average UK consumer is experiencing a severe cost-of living crisis as inflation surges to a forty-year high and the price of goods continues to rise. This shock is the result of the sharply increasing costs of commodities, energy, and the ongoing conflict in Ukraine, and is threatening FMCG manufacturers, retailers, and foodservice operators’ ability to survive and grow. Inflation will have a profound effect on many consumer-facing industries in 2022 and beyond. Consult GlobalData’s new whitepaper, Inflation in the UK: The Impact of Historically High Inflation on the UK Consumer Landscape, to better understand shifts in consumer behavior and their impact on spending patterns, as well as the implications for UK businesses. This whitepaper covers:  
  • Why has global inflation returned with a vengeance?
  • What is the current inflation situation in the UK?
  • What impact is inflation having on UK retail sales?
  • What tactics are businesses relying on to tackle the effects of high inflation?
  • How are consumers changing their behaviors to cope with the higher cost of living?
  • Which industry sectors are most vulnerable to reduced consumer demand?
  • How is the government responding to high inflation?
  • How long will high inflation last in the UK?
  • How can your company survive and thrive in a high inflation environment?
Enter your details here to receive your free whitepaper and ready your business for these increasingly uncertain times.
by GD50 Custom
Enter your details here to receive your free Whitepaper.

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