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Starbucks shuts Australian stores

Sydney - Iconic US coffee chain Starbucks said Tuesday it would shut most of its Australian stores within a week, having already taken the axe to hundreds of US outlets as an economic downturn bites.

The company said it would shut 61 "underperforming" stores from a total 84 in Australia because it was refocusing to concentrate on the major cities of Sydney, Melbourne and Brisbane and surrounding areas.

"This decision will result in the closure of 61 underperforming locations throughout the country by August 3," it said without detailing how many jobs would be lost, although media reports put the figure at 685.

Starbucks said earlier in July that it would shut 600 US stores in a move widely taken to reflect the slowdown in the world's biggest economy, where high fuel prices and a credit crunch are forcing consumers to tighten their belts.

The giant coffee chain's chairperson Howard Schultz said the firm had developed a transformation plan in January that had led to the "difficult but necessary" decision to close stores in Australia.

Schultz said in a statement the decision to shut the stores reflected problems specific to the country and did not reflect "the strong state of Starbucks business in countries outside of the United States".

"There are no other international markets that need to be addressed in this manner," he said. His statement reportedly followed a key telephone discussion between Starbucks executives in Australia and the United States.

Starbucks opened its first Australian store in 2000 but faced competition in some of the country's more cosmopolitan cities from an existing cafe culture.

"We would like to thank all of our customers for your continued patronage and support during the past eight years," the company said.

Starbucks added it would "reach out" to customers hit by the store closures by directing them to its Australian website and a customer care hotline.

The firm is scheduled to announce earnings figures later this week, according to its international website. A list of the Australian stores to be shut is due to be available from the close of business Thursday.

In April, the coffee chain revealed net earnings slipped 28 percent to $108.7m in the three months to March.

Starbucks opened its first store in the northwest US city of Seattle in 1971, taking its name from a character in Herman Melville's famous whaling novel "Moby Dick."

The firm had more than 16 000 stores by last April, offering items like frothy lattes, European-style macchiatos and syrupy Frappuccinos at prices some describe as expensive.

- AFP

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