Seattle, Washington - Coffee giant Starbucks is to ice 600 of its US coffee shops as economic problems hit the ability of consumers to pay 4 dollars for a cup of coffee.

The company said it would also limit its new stores to 200, and that it expected to eliminate some 12,000 workers with the closures.

The cutback represents some 7 per cent of the company's workforce, and closing the underperforming stores will incur one-time costs of as much as 348 million dollars, the company said in a statement. Once the process is complete, Starbucks said that the move will boost earnings by 100 million dollars a year.

The move represents the largest hiccup in a history of almost constant expansion since the early 1980s. In February, the company fired 600 employees and conducted an in-store retraining programme.

Starbucks shares are down some 40 per cent over the last year. (dpa)