In spite of the continuing decline in customer traffic and average sales receipt, the Seattle-based coffee retailer Starbucks Corp. has posted a better-than-expected profit in its fiscal third quarter, largely due to the cost-cutting measures undertaken by the company.

Starbucks’ $151.5 million - or 20 cents a share - third-quarter earnings beat the Wall Street estimates of 19 cents a share earnings. The profit figures are all the more noteworthy when compared to a $6.7 million loss reported by the company for the same quarter last year.

Commenting on Starbucks’ cost savings in the third quarter, the company’s officials said the $175 million in cost savings surpassed the initially-targeted $25 million savings’ figure. The officials added that Starbucks intends saving $180 million more in the fourth quarter; and $550 million for the full year.  

Most of the cost-cutting measures were initiated by Howard Schultz, after his return as the Starbucks CEO in January 2008. To swing Starbucks to profitability, Schultz announced closure of some stores; renegotiated rents; slashed the number of bakery suppliers; and ensured efficient running of stores.

Talking about the quarterly profit figures, Schultz said: “The transformation of Starbucks business — including the success of our consumer-facing initiatives and the permanent changes to our cost structure — is delivering improvements in comparable store sales trends and is beginning to be reflected in our financial performance.”