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Msg  127 of 127  at  4/5/2022 11:57:09 AM  by

jerrykrause


Starbucks Halts Share Buyback on Day Howard Schultz Returns as CEO

Starbucks Halts Share Buyback on Day Howard Schultz Returns as CEO
 

Starbucks said Monday that it will suspend its stock repurchasing program, effectively immediately, as Howard Schultz returns to the company as chief executive for the third time.

"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," Schultz wrote in his first letter to employees since returning as interim chief executive.

Starbucks announced last month that Schultz would temporarily replace CEO Kevin Johnson after he said he would retire on April 4.

The pausing of the share buyback comes as Starbucks faces pinched supply chains, effects from the Covid-19 pandemic, and heightened tensions and political unrest, Schultz added in the letter.

Schultz is returning at a time when the company is seeing growing momentum for unionization as workers demand better pay and working conditions. Starbucks baristas at New York City Reserve Roastery over the weekend voted in favor of forming a union, becoming the ninth company-owned location to unionize.

Starbucks Workers United has filed more than 70 unfair labor practice charges on behalf of organizing workers across the company, the union posted on Twitter. One allegation is that the company has engaged in union-busting practices.

"Howard Schultz is launching an elaborate campaign to try to prevent us from organizing, and is taking a good cop/bad cop approach," wrote SB Workers United in an email. "On the one hand he is offering to divert more of the company's wealth to partners from the shareholders and says that he wants to listen. On the other hand, he is directing a ruthless and vicious anti-union campaign across the country that is filled with threats, firings, misinformation, and slashing of our hours."

Starbucks spokesman Reggie Borges called the claims of anti-union activity "categorically false," on Monday, adding that the company wanted its partners to be well informed about whether to unionize or not, and to understand what is at stake. Schultz's decision to halt the buyback program had no correlation with the unionization efforts, Borges said.

"Historically, at any moment when [Schultz] led the company, it's always been partner-led," Borges said. "It should come as no surprise to anyone that on the first day as his role as CEO one of the first decisions he's made is to choose to support his partners and invest in his partners."

Since the Roastery unionized, three more Starbucks stores in Maryland announced they were moving to unionize.

"Starbucks has used us to make profits for you and your shareholders while we, the working people that make your money, see nothing in return," wrote the employees of a Starbucks in Bel Air, Maryland, in their letter to Schultz announcing their intention to form a union.

That followed Amazon.com (AMZN) workers at a site in New York who voted on Friday to form a union, the first at the e-commerce giant.

Schultz said in his letter that in the weeks ahead, he will travel to connect with employees in stores and manufacturing plants, as well as engage in "design sessions" with employees.

Some of Starbucks' largest institutional shareholders declined to speak about the suspension of the buyback plan, saying that they didn't comment on individual companies or holdings.

During Schultz's previous four decades as CEO and chairman at Starbucks, the company grew from 11 stores to more than 28,000 in 77 markets across the globe, the company said in a statement .

Between its initial public offering in 1992 and Schultz's departure in 2017, Starbucks delivered a 21,000% gain in the value of its stock price, it added.

Shares in Starbucks (ticker: SBUX) were down 4% on Monday. The stock has dropped about 25% so far this year.

 


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