Did Howard Schultz make a wise course correction on his first day back at Starbucks? – RetailWire

April 05, 2022

He is back. Howard Schultz has started his third turn at the helm of Starbucks and it didn’t take him long to catch the attention of the coffee giant’s stakeholders.

Mr. Schultz, writing a letter to associates the company shared publicly, said Starbucks was immediately suspending a stock repurchase program announced three weeks earlier. In doing so, he wrote: “will allow us to invest more profit in our employees and our stores – the only way to create long-term value for all stakeholders.

Starbucks decision to suspend buyouts follows Biden administration decision budget proposal for fiscal year 2023 which is intended to prevent corporate executives from personally benefiting financially from the sale of shares in such cases. The proposal, if Congress included it in the budget it passes, would prohibit executives from selling stock each year a company announces a buyout.

Investors weren’t thrilled with Mr. Schultz’s decision. Shares of the company were down 3.72% in premarket trading this morning.

Mr. Schultz’s audience, however, is not comprised solely of those who want to reap greater shareholder value. He enters his new term as interim CEO knowing he may not have much time to get the company back on track, he says.

This road begins with reconnecting with Starbucks baristas. The chain is facing a small but growing surge of unionization in its stores. So far, ten locations have voted to join Starbucks Workers United, the latest being the chain’s flagship Reserve Roastery in Manhattan. More than 180 of more than 9,000 Starbucks in the United States have filed petitions for union votes.

Mr. Schultz wrote that he will travel with other business leaders in the coming weeks to meet with employees at stores and manufacturing plants. The goal, he told them, is “to understand your thinking and ideas about how to build this next Starbucks.”

He also said the company would “engage in design sessions with partners at all levels of the organization to co-create a future of mutual prosperity in a multi-stakeholder era. We view these sessions as the most deeper to invent together than we have ever attempted as a community.

DISCUSSION QUESTIONS: Do you agree with Howard Schultz that investing more Starbucks profits in people and stores is “the only way to create long-term value” for the chain? How likely is Starbucks to be able to convince most stores asking unions to reject Starbucks Workers United?

Braintrust

“Of course, short-term investors are upset. Long-term investors should be thrilled.”

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