Starbucks’ Schultz Announces Halting Stock Buybacks, Stocks Fall | Financial market news
The Starbucks founder and new interim CEO said the coffee giant will invest more profits in its employees and stores.
Starbucks founder and new interim CEO Howard Schultz announced on Monday that the coffee chain was suspending its stock buyback program to “invest more profits in our employees and our stores.”
The strategy’s pivot comes just three weeks after Starbucks announced that Schultz, who bought the company in 1987 and led it for more than 30 years, would take over the lead role at the company until it finds a permanent CEO. Since that announcement, analysts and pundits have speculated that Schultz was being brought back to help the company fight a growing campaign for workers’ rights that has seen six of its stores vote to unionize since December, with at minus 140 others in 27 states filing petitions for union. elections.
Two weeks ago, baristas and other employees at a Starbucks in Seattle voted to unionize, the first such vote in Starbucks’ hometown. Starbucks has 9,000 company-owned stores in the United States.
Schultz’s blog post on Monday was filled with references to “partners” – what the company calls its employees. “My first job is to spend a lot of time with partners,” Schultz wrote. “To raise voices.”
During his previous career with the company, the 68-year-old Schultz successfully fought attempts to unionize Starbucks stores and roasting plants in the United States. Starbucks had to reinstate laid off workers or pay to settle labor law violations on several occasions under Schultz’s leadership in the early 2000s.
Last year, the National Labor Relations Board found that Starbucks had unlawfully retaliated against two Philadelphia baristas who were trying to unionize. The NLRB said Starbucks monitored employees’ social media, illegally eavesdropped on their conversations, and eventually fired them. He ordered Starbucks to stop interfering with workers’ right to organize and to offer reinstatement of the two workers.
Most recently, on March 15, the NLRB filed a lawsuit against Starbucks alleging that district and store managers in Phoenix spied on and threatened workers who supported unionization. The complaint says Starbucks suspended one union supporter and fired another.
In a November letter to employees, released just before the first unionization votes at three stores in Buffalo, New York, Schultz said he had tried to create the kind of company his working-class father had never had his way. the chance to work.
He recalled the trauma of his family without an income after his father was injured on the job, and said that’s why Starbucks has benefits like health care, free tuition, parental leave and benefits. equity grants for employees.
“No partner has ever needed a representative to seek out things that we all have as partners at Starbucks. And I’m saddened and worried to hear anyone think it’s necessary now,” Schultz wrote.
Schultz is holding a town hall meeting with employees on Monday.
Late last year, Starbucks announced it was embarking on a $20 billion stock buyback and dividend program to return profits to investors. It’s unclear how much of that figure would have gone to share buybacks.
Starbucks shares have fallen more than 3% in premarket trading and more than 20% year-to-date.
Starbucks announced on March 16 that Schultz was stepping in to replace outgoing CEO Kevin Johnson.