Starbucks UK recorded a 4% drop in sales to £525.6million for the 52 weeks to September 29, due to a "challenging consumer environment".
The drop pushed the company into a pre-tax loss of £35.2million, a sharp reversal from the £16.9million profit recorded the previous year.
The business cited multiple challenges, including rising commodity prices, calls for consumer boycott and cost of living pressures further weighing on spending.
Starbucks said footfall at some locations was affected the first half of the year due to what it described as misconceptions around its stance on the Israel-Hamas conflict. The firm was listed among companies targeted for boycott over alleged support for Israel.
In line with its weaker financial performance, Starbucks UK paid £1million in corporation tax, down significantly from £7.2million the year before.
FTSE 100
The UK's flagship share index, the FTSE 100, was up 197-points at 7,577 shortly after opening this morning.
Brent crude oil futures were up 1.06%, trading at $64.89 a barrel.
Companies reporting today
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JTC - Full Year Results