Day: June 4, 2018

Starbucks executive Schultz to step aside, mulling ‘range of options’

Starbucks CEO Howard Schultz speaks during the company's annual shareholders meeting in Seattle, Washington

FILE PHOTO: Starbucks Chief Executive Howard Schultz speaks during the company’s annual shareholders meeting in Seattle, Washington March 18, 2015. REUTERS/David Ryder/File photo

By Lisa Baertlein

(Reuters) – Starbucks Corp Executive Chairman Howard Schultz is stepping away from hands-on management at the global coffee chain, effective June 26, fuelling speculation that the outspoken, liberal-leaning executive will make a U.S. presidential bid.

Schultz, 64, over roughly four decades has built Starbucks into one of the world’s most powerful global brands. Under his leadership, the Seattle-based coffeeshop chain went from 11 cafes to over 28,000 in 77 countries.

He became Starbucks’ executive chairman last year, handing the chief executive job to Kevin Johnson at a time when growth in Starbucks’ dominant U.S. market was showing signs of cooling.

That cooling trend has not abated and some analysts and investors have begun pressing the company to temper new store openings in the United States, where it already has more than 14,000 locations.

Some investors interpreted Monday’s news as a sign that Schultz was finally making an expected move into politics.

“For two years, I have offered that Schultz will seek the 2020 Democratic presidential nomination … I still believe so,” said Douglas Kass, founder of hedge fund Seabreeze Partners Management Inc, who has a “short” position on Starbucks shares.

In recent years, Schultz has repeatedly denied that he has political ambitions, but he appeared to be more open to the idea in an interview with CNN last week.

Asked specifically about a U.S. presidential run Schultz, said in a New York Times article on Monday: “I intend to think about a range of options, and that could include public service. But I’m a long way from making any decisions about the future.”

Schultz added that he has for some time been “deeply concerned about our country – the growing division at home and our standing in the world. “One of the things I want to do in my next chapter is to figure out if there is a role I can play in giving back,” he said, adding: “I’m not exactly sure what that means yet.”

Starbucks declined to make Schultz or other Starbucks executives and board members available for comment.

As executive chairman, Schultz oversaw the opening of upscale Reserve stores and massive Roastery showrooms as part of its new Siren Retail initiative.

“He’s leaving when it’s still in its nascent form,” Bernstein analyst Sara Senatore said.

“It removes a perceived leadership ‘safety net’ and creates a degree of uncertainty at a time when Starbucks faces a number of challenges,” said BMO Capital Markets analyst Andrew Strelzik.

Schultz, known for being outspoken on social issues ranging from gay marriage to government gridlock, was heavily involved in steering the company through an anti-bias training program last month.

That effort came after a Philadelphia cafe manager’s calls to police resulted in the arrests of two black men who were waiting for a friend – leading to protests and accusations of racial profiling at the chain.

Starbucks’ board named Myron Ullman, previously chairman and CEO of struggling retailer J.C. Penney Co, as its new chair, and Mellody Hobson as vice chair effective upon Schultz’s retirement.

Schultz will also resign from Starbucks’ board and will be named chairman emeritus, the company said.

Starbucks shares closed up 0.28 percent at $57.07 in regular Monday trading on the Nasdaq, but were down 1 percent at $56.50.

(Reporting by Tamara Mathias in Bengaluru, Lisa Baertlein in Los Angeles and Jennifer Ablan in New York; editing by Anil D’Silva and G Crosse)

 

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