“Effective immediately, we are suspending our stock buyback program,” Schultz wrote in an open letter to Starbucks employees, customers and others that was released early Monday. “This decision will allow us to invest more in our people and our stores – 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 the company’s chief executive. Starbucks said it would find a permanent CEO by the fall. In the meantime, Schultz participates in the management of the company and the search for a successor.
It also tries to dissuade employees from unionizing.
Schultz was trying to build support for the company even before joining as interim CEO. In November, he spoke directly to employees in the Buffalo area about the merits of the company. He also authored a letter posted on the company’s website touting the importance of a “direct and shared relationship” with workers.
The decision to stop repurchasing shares may also be aimed at building support for company management.
Just a few weeks ago, on March 16, the company said it had reinstated its buyback program. He said at the time that over the next three fiscal years he planned to return $20 billion to shareholders. Since Monday, the program has been suspended.
Buyback programs are popular among investors because they reduce the total number of shares outstanding, thereby increasing earnings per share. But not everyone is a fan. Vermont Senator Bernie Sanders called Starbucks following the announcement, saying, “If Starbucks can afford to spend $20 billion on stock buybacks and dividends…it can afford a workforce. unionized work.”
A Starbucks spokesperson called the decision to suspend the buyback program “a Starbucks program, and only a Starbucks program.”
Schultz is back at the helm at a pivotal time for Starbucks.
Not only is the organizing campaign gaining momentum, but the company faces a number of other challenges.
Starbucks “faces new realities in a changed world,” Schultz wrote. Specifically, “pinched supply chains, the decimation caused by Covid, heightened political tensions and unrest, racial reckoning, and a rising generation seeking new corporate responsibility.”
The company “can choose to stand up until then – or sit idle,” he said. Schultz said he hopes for “an evolution in our business.”
To that end, he plans to spend time with employees to hear their thoughts.
“I will be traveling … to connect with partners in our stores and manufacturing facilities around the world to understand your thinking and ideas on how to build this next Starbucks,” he wrote.
Schultz is hosting an open forum for employees on Monday, according to the company spokesperson, where he will address some of the macroeconomic issues affecting the company.
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