“We are suspending our share buyback program effective immediately,”
Schulz wrote in an open letter to Starbucks employees, customers and others released early Monday. “This decision will allow us to invest more in our people and our businesses – the only way to create long-term value for all stakeholders.”
Monday marks Schultz’s first day as interim CEO and his
third term as CEO the company. Starbucks said it would find a permanent CEO by the fall. In the meantime, Schultz runs the company and helps to find a successor.
He also tries to dissuade employees from unionizing.
Schultz tried to build support for the company even before he returned as interim CEO. In November, he spoke directly to employees in the Buffalo area about the benefits of the company. He also
wrote a letter posted on the company’s website, touting the importance of a “direct and mutual relationship” with workers.
The decision to stop buying back shares may also aim to build support for the company’s management.
Just a few weeks ago, on March 16, the
company said that it had reinstated its buyback program. At the time, it said it was planning to return $20 billion to shareholders over the next three fiscal years. The program has been suspended since Monday.
Buyback programs are popular with investors because they reduce the total number of shares outstanding and increase earnings per share. But not everyone is a fan.
Vermont Senator Bernie Sanders called Starbucks After the announcement, he said, “If Starbucks can afford to spend $20 billion on stock repurchases and dividends…it can afford a unionized workforce.”
A Starbucks spokesman called the decision to suspend the buyback program “an agenda of Starbucks and Starbucks only.”
Starbucks, developed
Schultz is back at the helm at a pivotal moment for Starbucks.
Not only is union organization gaining momentum, the company is also facing a number of other challenges.
Starbucks “faces new realities in a changed world,” Schultz wrote. In particular, “jammed supply chains, Covid-induced decimation, heightened tensions and political unrest, a racial reckoning and a rising generation seeking new corporate accountability.”
The company “can either choose to stand up to this moment — or stand still,” he said. Schultz said he hopes for “further development of our company”.
To that end, he plans to spend time with the staff to hear their thoughts.
“I will be traveling… to connect with partners in our stores and manufacturing facilities around the world to understand your thoughts and ideas on building that next Starbucks,” he wrote.
According to the company spokesman, Schultz is hosting an open forum for employees on Monday where he will address some of the macroeconomic issues affecting the company.
https://www.cnn.com/2022/04/04/business/starbucks-buyback-program/index.html Howard Schultz suspends Starbucks stock buyback program
