Starbucks Coffee Can Cause Amnesia!
Troy Alstead, the chief financial officer (CFO) for Starbucks, recently told the UK Public Accounts Committee that Starbucks’ UK shops were loss-makers. In my view, he urgently needs to see his doctor as he appears to be suffering from severe amnesia.
His presentations to investors in previous years, far from using terms such as loss-makers, described the UK results as “profitable” and “very pleasing”. In fact his amnesia also appears to completely blank out the results from years such as 2007 and 2008, when his predecessor as CFO was reporting on an operating profit margin of 15% from the UK.
Other members of the Starbucks board also appear to be in the latter stages of the disease. Chief operating officer Martin Coles has stated that the UK has lost money for years, yet in 2007 he was telling investors that the UK profits were “funding expansion in other markets”.
Despite the big losses in the UK, just two years ago the Chief Executive Howard Schulz told investors the UK model was “an example for our US operations to follow”. Surely following such a loss-making model across their largest market would be disastrous?
What no-one can deny is that with just over 600 outlets, the UK is the third largest area of the business after USA and Canada, nearly twice the size of China in fourth. Hopefully the amnesia has not caused the directors to forget how many shops they have here!
Starbucks are blatantly making considerably more profits in the UK than they are declaring. They are using trickery to shift profits to other lower tax countries. I beg to differ with statements by big tax avoiders that “Global tax is complex.” It is only complex if you are fiddling it!
HMRC could have and should have been hounding these guys and extracting a fairer share from them. In my view, HMRC should immediately take 400 staff away from hounding small business owners for small beer, and put them on to large multinational corporations with a target to get tens of millions of tax back for the country.
Meanwhile, I have decided the health risks of drinking Starbucks coffee are too great. I don’t want to contract amnesia like the Starbucks board, so I won’t be buying any Starbucks product until they can all remember how much money they are making in the UK.
Wednesday 5 December 2012