Starbucks Corporation (NASDAQ: SBUX) terminated its share repurchase programme on Monday to invest more into “our people” and “our stores”. Shares slid 5.0%.
Rationale for suspending stock buybacks
Starbucks has had 170 of its locations petition to unionize in recent weeks – a situation it hopes will remedy as it invests the freed-up cash back into operations. On CNBC’s “Squawk on the Street”, Yale’s Jeff Sonnenfeld said:
The symbolic move to cancel stock buybacks is certainly a signal that CEO Howard Schultz is trying to rework the relationship with labour. He’s forged a great bond with his workforce previously and has a reputation for not wanting a third-party in there.
Inflationary pressures and a slowdown in China are among other headwinds currently troubling Starbucks. The stock is down 25% for the year.
Howard Schultz returned with a boom
Suspending stock buybacks was the first announcement Howard Schultz made as he joined Starbucks again as its interim CEO on Monday. In a letter to the workforce, he wrote:
This decision will allow us to invest more profit into our people and our stores; the only way to create long-term value for all stakeholders.
Schultz has previously held the top position at Starbucks from 1986 to 2000 and again from 2008 to 2017. Originally, the American multinational was expected to spend $20 billion on dividend payments and buybacks over the next three years.
The post New Starbucks CEO terminates stock buybacks on his first day appeared first on Invezz.