“Starting immediately, we are suspending our share repurchasing program,” Schultz wrote in an open letter to Starbucks employees, customers and others which was published early Monday. “This decision will allow us to invest more into 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 stint as chief executive of the company. Starbucks said it will find a permanent CEO by the fall. In the meantime, Schultz is helping run the company and helping in the search for a successor.
He’s also trying to dissuade employees from unionizing.
Schultz was trying to build support for the company even before he joined as interim CEO. In November, he spoke directly to Buffalo-area employees about the company’s merits. He also penned a letter posted to the company’s website touting the importance of a “direct and shared relationship” with workers.
The decision to stop buying back shares may also be designed 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. It said at the time that over the next three fiscal years, it was planning to return $20 billion to shareholders. As of Monday, the program has been suspended.
Buyback programs are popular among investors because they lower the total number of outstanding shares, increasing earnings per share. But not everyone is a fan. Vermont Sen. Bernie Sanders called Starbucks out following the announcement, saying “If Starbucks can afford to spend $20 billion on stock buybacks and dividends … it can afford a unionized workforce.”
A Starbucks spokesperson characterized the decision to suspend the buyback program as “Starbucks’ agenda, and only Starbucks’ agenda.”
Schultz is back at the helm at a pivotal moment for Starbucks.
Not only is the unionization drive picking up steam, but the company is up against a number of other challenges.
Starbucks “is facing new realities in a changed world,” Schultz wrote. Specifically, “pinched supply chains, the decimation caused by Covid, heightened tensions and political unrest, a racial reckoning and a rising generation which seeks a new accountability for business.”
The company “can either choose to rise at this moment — or stand idle,” he said. Schultz said that he hopes for “an evolution of our company.”
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 plants around the world to understand your thinking and ideas about how to build this next Starbucks,” he wrote.
Schultz is holding an open forum for employees on Monday, according to the company spokesperson, during which he will address some of the macroeconomic issues affecting the company.