Starbucks Corp. yesterday said US$58.8 million in losses from its investments in four e-commerce ventures nearly wiped out the operating profit that the coffee maker earned from its core retail business during the company's fiscal fourth quarter.
Seattle-based Starbucks said its operating earnings totalled $68.1 million in the quarter that ended Oct. 2. Had it stuck to selling coffee, the company said, net income for the three-month period would have been $43.8 million, up 35% from $32.4 million in last year's fourth quarter.
But Starbucks said it had to take $38.2 million in charges in order to write down the majority of its investments in e-commerce ventures Kozmo.com Inc., Cooking.com Inc. and Talk City Inc. That was in addition to a previously disclosed write-off of $20.6 million related to an investment in Living.com Inc., an online furniture retailer that went out of business in August.
The charges were needed to write the Internet investments "down to their fair values," Starbucks said. After the write-down, the company was left with a total of only $4.8 million worth of investments in the e-commerce ventures on its balance sheet. Starbucks said the charges aren't expected to affect earnings during its new fiscal year.