Howard Schultz returned to Starbucks as interim CEO and one of the first things he did is halt the buyback of Starbucks shares.
As Schultz came back a third time to lead the global coffee chain, the director of the board also announced that the company will suspend its stock repurchasing program immediately. In a written statement, he mentioned, “this decision will allow us to invest more into our people and our stores — the only way to create long-term value for all stakeholders.”
Speaking of his vision for the company, he wrote, “Our vision is to once again reimagine a first-of-a-kind for-purpose company in which the value we create for each of us as partners, for each of us as customers, for our communities, for the planet, for shareholders — comes because our company is designed to share success with each of us and for the collective success of all our stakeholders.”
Starbucks ShareFall
Schultz’s return comes at a time when there has been rising discontent amongst the coffeechain’s workers across the US. There have been calls for unionizations and workers have asked for better work conditions and pay. He has been widely credited with growing Starbucks into a global coffee chain.
Late last year, in October, Starbucks informed its stakeholders that it will implement a $20 billion share repurchase and dividend program spread across three years, in order to return profits to investors.
However, shortly after Schultz’s announcement, Starbucks’ stock prices tumbled downward. Starbucks share prices were down almost four percent on Monday afternoon.
In a letter to employees, he asserted his commitment to the company and assured stakeholders that in the coming weeks he “will be traveling, along with our leaders, to connect with partners in our stores and manufacturing plants around the world to understand your thinking and ideas about how to build this next Starbucks.”
Analysts believe that the decision will lower earnings in fiscal 2023 by nearly two to three percent. Industry experts are of the opinion that by halting the buybacks Schultz is getting ready to invest more in the company he helped found, by fending off unions, and focusing more on employees and growth. In the letter, Schultz reiterated his commitment to the coffeechain and mentioned that he hoped everyone will work together “to create a positive impact in the world.”
Starbucks and Unionization
As workers call for unionization, most industry veterans believe that Schultz will work towards halting unionization.
Starbucks spokesman Reggie Borges, however, denied such claims and called attention to Schultz’s leadership style of prioritizing the company’s partners. He stated, “Historically, at any moment when he led the company, it’s always been partner-led. It should come as no surprise to anyone that on the first day of his role as CEO one of the first decisions he’s made is to choose to support his partners and invest in his partners.”
Baristas at over 150 US locations have petitioned the labor board for union elections. Senator Bernie Sanders of Vermont had even written to Schultz asking him to accept unionizing efforts. In his letter, he cited complaints received by the National Labor Relations Board, where workers complained of illegal surveillance and threats against union supporters.
Meanwhile, Starbucks has continually denied such claims and stated that it only took action against employees who violated store policies. In 2021, a store in Buffalo became the first one to unionize while hundred others await union votes.
During Schultz’s reign the company grew from 11 stores to over 28,000, with a presence in 77 markets. He was also instrumental in developing the rewards program for their customers. During his tenure, Starbucks stocks delivered a 21,000% return, since its IPO, to investors.
