US coffee retail chain Starbucks has announced that Starbucks Coffee Japan has returned to profitability and is well on its way to continued growth and expansion in the country.

“This is a significant milestone for Starbucks in Japan,” said Howard Schultz, chairman of Starbucks. “Over the past year, Starbucks Coffee Japan has implemented a solid recovery plan and I believe that their strategic actions have successfully strengthened the foundation of the business, made continued market share gains and increased customer loyalty and brand recognition.”

Starbucks Coffee Japan reported sales of US$523.4m and net income of $1.7m for its fiscal year ended March 2004, in line with the sales and profit targets the company announced in November 2003. The result was achieved through a focus on product innovation in beverage and food, expense reduction initiatives and new store openings, the company said.

Starbucks Coffee Japan, which was established in October 1995 as a joint venture between Sazaby and Starbucks Coffee International, currently operates more than 500 stores.