A new wave of employee unrest has erupted as Starbucks Corp. suspends buybacks of billions of shares. The company’s interim CEO, Howard Schultz, said that the decision will free up cash to invest in employees and cafes. He is also returning as CEO following the recent resignation of former CEO Kevin Johnson. However, the move may be a temporary one.
In an announcement, Starbucks suspended its stock buyback program, resulting in a steep drop in shares. The new interim CEO, Howard Schultz, had announced in September that the company was suspending buybacks to invest in its operations and growth. Earlier this year, Schultz, who took over as CEO in November 2016, committed to spend $20 billion on dividends and buybacks in the next three years. Now, as he has re-joined the company, he has decided to halt buybacks in order to put more money back into the business and its employees.
After a fallout from the Covid-19 pandemic, Schultz has announced that the company is suspending its buybacks to reinvest in its cafes and its employees. The move means the company will have more cash to invest in the next phase of growth. Although the decision will impact the bottom line of Starbucks, it will ultimately result in more profits for the company. But there are some lingering questions about Schultz’s reasons behind the change.
In the last quarter, Starbucks ceased its stock buybacks to invest in its employees. The move comes as no surprise, considering that its baristas petitioned the federal labor board for a union election. The company also issued $1.5 billion in debt for corporate purposes, including expanding the company’s franchise network. Despite the recent troubles, Schultz’s leadership has shown that the company is committed to growth and hiring new employees.
The company paused the buybacks to invest in its employees and cafes. The move comes less than a month after Schultz’s return to the top job. As a result, the company has invested about $10 billion in its buybacks, but plans to invest in its employees in the future. In addition to that, it also wants to prevent any potential future mergers and acquisitions with its current workforce.
In addition to the buybacks, the company plans to invest the money it saved by suspending its share repurchases. The company is now facing the challenge of unionizing its employees and building a new corporate culture. As the first phase of its turnaround, Schultz’s announcement marks the beginning of a new era for the coffee giant. The transition to the next phase of Starbucks’ growth will be difficult.