Howard Schultz was Starbucks Corp. (NASDAQ: SBUX) chief executive officer from 1987 until 2000. Then he was CEO from 2008 to 2017. He came back in 2022 until 2023 as interim CEO. Schultz has been around for a long time, and some people believe he is the founder. He is certainly the man the board calls on when Starbucks has a problem. Schultz says Starbucks has a new problem, which insults current CEO Laxman Narasimhan.
Recently, Schultz said on LinkedIn, “The stores require a maniacal focus on the customer experience, through the eyes of a merchant.” This assumes that current management does not know enough about the workers in Starbucks stores and how they handle customers.
Schultz’s strongest weapon is recent earnings and share price at Starbucks. The stock was down 32% last year, while the S&P 500 was 23% higher. Comparable sales dropped 4% worldwide and 3% in the United States. U.S. customers paid slightly more per visit but made fewer visits. Other coffee shops are among the fastest-growing brands in each state this year.
Starbucks used to be a growth stock. It is not one anymore. Revenue in the most recent quarter fell 3% to $8.6 billion year over year. Earnings dropped from $0.79 per share to $0.68. Management did not give much of a reason. Narasimhan said, “In a highly challenged environment, this quarter’s results do not reflect the power of our brand, our capabilities or the opportunities ahead.”
Narasimhan better be careful and post stronger results, or Schultz will be back again.
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