STARBUCKS Corp, the world's biggest chain of coffee shops, fell 11 percent in late Nasdaq trading yesterday after forecasting its first annual profit decline in eight years on slowing US sales.

Profit in the year through September will probably trail the 87 cents a share the company posted last year, Seattle-based Starbucks said yesterday. Analysts surveyed by Bloomberg estimated 97 cents a share for the year.

"The company has revised the earnings guidance pretty dramatically," Jack Russo, an analyst at Edward Jones & Co in St Louis, said in a telephone interview. "This is all very serious stuff." Russo recommends holding the shares.

Howard Schultz returned as chief executive officer in January after two quarters of US customer declines erased almost half the company's stock market value. He has closed stores and retrained employees to make espressos just as record gas prices, a stalled housing market and soaring food costs prompt consumers to seek ways to cut back spending.

"The current economic environment is the weakest in our company's history," Schultz said in the statement.

Starbucks tumbled US$1.91 to US$15.94 in New York trading after the close of the Nasdaq Stock Market yesterday.

Schultz, 54, is trying to return Starbucks to the sales- growth rates of 20 percent or more that the chain posted earlier in the decade.

Starbucks is down 1.4 percent since Schultz returned to the CEO position after a seven-year hiatus. He hired former colleagues who worked at Starbucks during the past two decades to assume newly created positions.

The company revived an earlier design of coffee cups and began selling a milder blend of coffee called Pike Place Roast, named for its first store, in all company-owned shops.

Schultz will discontinue breakfast sandwiches partly because their smell overwhelmed the aroma of coffee in the cafes.