It looks like Starbucks founder Howard Schultz has decided to shake things up during his first day back in the saddle as the company's interim CEO.
In a letter to Starbucks stakeholders entitled "On the Future of Starbucks", Schultz announced that he planned to halt share buybacks, effective immediately, in order to "invest more into our people and our stores - the only way to create long-term value for all stakeholders."
The decision marks an abrupt reversal, since the company had only just restarted buybacks following a pandemic pause.
As the NYT reminds us, Schultz spent more than $6 billion on buybacks between 2008 and 2016 during his most recent stint as CEO. Schultz's decision to halt buybacks was likely motivated by the growing unionization push among Starbucks' restaurants. Nearly a dozen Starbucks stores have unionized over the past year, including the company’s flagship store in Manhattan, which approve a unionization drive by a vote of 46-36 on Friday.
And that number could be about to explode: more than 100 locations in more than 25 states, out of nearly 9,000 company-owned stores across the country, are planning to hold elections.
Starbucks spent $10 billion on buybacks in 2019, but the company paused buybacks at the start of the pandemic. The company only resumed the practice this year, spending $3.5 billion on buybacks in its most recent quarter.
So far, investors have expressed their displeasure with Schultz's decision by driving shares of the coffee purveyor down more than 1% during premarket trading on the news.