April 29 (Bloomberg) -- Starbucks Corp., the world’s largest coffee-shop operator, said second-quarter profit fell 77 percent and announced it would open fewer stores than planned this year as consumer spending declines.

Net income dropped to $25 million, or 3 cents a share, in the three months ended March 29, the Seattle-based company said today in a statement. Starbucks will add 20 locations this year, down from the 95 it predicted in January, as it seeks to cut $500 million in costs through September.

Chief Executive Officer Howard Schultz is fighting the perception that Starbucks’s espresso-based coffees are a pricey luxury as consumers cut store visits amid the longest recession since the postwar era. The coffee seller is facing competition from McDonald’s Corp. and Dunkin’ Donuts Inc., both of which sell cheaper lattes and cappuccinos. Starbucks last month introduced $3.95 breakfast meals, pairing tall coffee and lattes with egg sandwiches, oatmeal and coffee cake to boost sales.

“Sales, for the most part, were a little bit weaker than we were looking for,” Tom Forte, an analyst with Telsey Advisory Group in New York, said in an interview on Bloomberg Television. “We did see a decline in traffic both in the U.S. and internationally.”

Restructuring Charges

The chain booked $152.1 million in asset impairment, lease termination and severance charges. Excluding restructuring costs, the company earned 16 cents a share, topping analysts’ average estimate for profit of 15 cents. Sales fell 7.6 percent to $2.33 billion.

Starbucks advanced 6 cents to $13.75 at 5:46 p.m. after the close of Nasdaq Stock Market trading. Before the earnings release, the shares rose 19 cents to $13.69. The stock has lost 45 percent this year.

The company said it’s making “good progress” cutting costs, and saved $120 million in the second quarter. The coffee seller reaffirmed its forecast for cash from operations of more than $1 billion this year.

The company is closing 300 stores this year, in addition to the 600 closings it announced last year. The company had 16,862 cafes at the end of March.

Schultz, 56, plans to expand marketing efforts to reinforce the company’s position as a coffee authority, and is making the coffee growing and trading processes a focus in some remodeled stores. Starbucks is testing improved equipment, rolling out new espresso machines in 4,000 cafes, and promoting its fair-trade products that support farmers who grow the beans, Schultz said last month at the company’s annual meeting in Seattle.

Starbucks has also entered the $17 billion soluble coffee market with Via, an instant mix available in two roast blends. The product was unveiled in Seattle, Chicago and London last month, and will be rolled out to the rest of the U.S. this year.

To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net.

Last Updated: April 29, 2009 17:50 EDT