Howard Schultz returns to Starbucks as interim leader, Johnson exits

Longtime Starbucks chief Howard Schultz will return to the helm of the global coffee shop chain, the company announced Wednesday, serving as interim CEO while the company searches for a new leader amid a growing unionization drive.

Kevin Johnson, who has led the coffee giant since 2017, plans to retire next month, the company said, adding it expects to name a new CEO by the fall. 

Schultz, 68, who first joined the company in 1982, grew Starbucks from a small Seattle coffee chain into a global juggernaut in two earlier stints as chief executive. 

He also flirted with running for the US presidency in 2020, but ultimately opted against seeking office. His real-time wealth was valued at $4 billion on Wednesday, according to a Forbes list of the richest people in the world.

“When you love something, you have a deep sense of responsibility to help when called,” Schultz said. “Although I did not plan to return to Starbucks, I know the company must transform once again to meet a new and exciting future where all of our stakeholders mutually flourish.” 

Shares of the coffee chain rocketed higher Wednesday, even as union leaders expressed misgivings about Schultz.

‘Reputational risk’

With more than 34,000 stores worldwide, Starbucks reported a record $29.1 billion in annual revenues last year but has struggled of late to manage rising costs amid a tight labor market and supply chain problems.

Besides inflation, which is a headwind challenging companies throughout the economy, Starbucks is confronting a growing wave of unionization campaigns that has spread to more than 100 US stores after workers at two upstate New York cafes voted to form a union in December.

Johnson, 61, told the board a year ago that he was considering retiring in the wake of the upheaval of the pandemic, calling the decision “a natural bookend to my 13 years with the company,” according to the company press release.

Starbucks said it had enlisted recruitment firm Russell Reynolds Associates in “continuous CEO succession planning” since 2021. Johnson plans to work as a consultant to the company through September.

The union movement poses challenges for the chain, which has been viewed as a worker-friendly company by many political progressives in the United States given its stance on gay marriage, race relations, the environment and other issues.

But Starbucks’ tactics to discourage workers from unionization poses “reputational risk,” shareholder activists argued in a letter sent to Johnson and Starbucks Chair Mellody Hobson ahead of the company’s annual meeting later Wednesday.

Highlighting “alleged retaliatory termination and continued captive audience meetings,” the shareholder group urged Starbucks to “publicly commit to a global policy of neutrality,” said Trillium Asset Management, Parnassus Investments and other Starbucks shareholders who manage some $3.4 trillion in assets.

Looking externally

News of Schultz’ return drew a cool response from Starbucks Workers United, which referred to the executive as a “leader in Starbucks’ anti-union campaign,” and urged him “to put union-busting behind him.”

Ahead of the union vote, Schultz visited Buffalo in November to try to persuade workers against voting for the group.

In a letter to workers titled “From Buffalo with love,” Schultz highlighted Starbucks’ benefits for workers, including health care and free college tuition, saying he was “saddened and concerned” that workers felt outside representation was needed.

But staff at two Buffalo cafes voted with Starbucks Workers United on December 9. Since then, additional Buffalo-area shops have also voted with the group, along with a cafe in Mesa, Arizona, while employees at dozens more are working to form a union.

Equity analysts at investment firm Cowen said they were “a bit surprised” that Starbucks was searching for external CEO candidates, naming a number of high-ranking executives who could have taken over.

“We note a strong internal bench, but believe unionization publicity could be a factor pushing the company to look externally,” Cowen said in a note.

Shares of Starbucks jumped 5.4 percent to $87.61 in afternoon trading.

For all the latest business News Click Here 

Read original article here

Denial of responsibility! TechAI is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.