Interim CEO Schultz said cash spent on buybacks would be better directed towards “investing more into our people and our stores”.
Starbucks (SBUX) – Get Starbucks Corporation Report shares moved lower Monday after CEO Howard Schultz, in his first move as interim boss of the world’s biggest coffee chain, suspended the group’s stock buyback program.
Schultz, who stepped down as CEO in 2008 but served as executive chairman until 2018, returned to the helm following the surprise retirement of former CEO Kevin Johnson and vowed to employees to “work with all of you to design our next Starbucks … where we work together to create a positive impact in the world.”
Starbucks had said, under CEO Johnson in February, that it “stood by” its commitment to returning $20 billion to shareholders, in dividends and buybacks, over the next three years.
Schultz said cash spent on buybacks would be better directed towards “investing more into our people and our stores”, adding it is the “only way to create long-term value for all stakeholders.”
Stocks Edge Higher, Week Ahead, Tesla, Starbucks And Amazon – Five Things You Must Know
“Our vision is to once again reimagine a first-of-a-kind for-purpose company in which the value we create for each of us as partners, for each of us as customers, for our communities, for the planet, for shareholders — comes because our company is designed to share success with each of us and for the collective success of all our stakeholders,” Schultz wrote in a letter to employees on Monday.
Starbucks shares were marked 1.1% lower in pre-market trading to indicate an opening bell price of $90.51 each.
Schultz, once a fledgling candidate for President in the 2020 election, looks to have followed at least the spirit of President Joe Biden’s move to restrict corporate share buybacks in his recent budget proposal.
S&P 500 companies bought back $882 million worth of shares last year, the highest total on record, and the Biden Administration wants to limit the ways in which CEOs — and other company executives — can sell their own shares back to the company as part of those repurchases.
Starbucks lowered its 2022 profit guidance last month, and said it would begin hiking prices across its food and beverage menu, amid the ongoing hit to input costs from supply chain disruptions and slowing sales in China.
The group posted weaker-than-expected earnings of 72 cents per share, missing Street forecasts by 8 cents, even as sales rose 19% to $8.1 billion.
Sales in China, however, its most important market outside of the United States, fell 14% on a like-for-like basis amid Covid-linked disruptions in the world’s second-largest economy.
