Howard Schultz began his third go-around at Starbucks by doing away with one of Wall Street’s favorite things: the share buyback.
Schultz, who built Starbucks into the second-largest restaurant chain in the world, started his third tenure as CEO by doing away with share buybacks. In a letter to employees on Monday, he said the stock repurchasing program would be suspended “effective immediately.”
“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,” he said. Schultz then said he planned to talk with employees in the coming weeks to design the next generation of Starbucks.
The decision was not necessarily greeted warmly on Wall Street. Starbucks’ stock was down nearly 4% in premarket trading.
Yet the move is a signal of the environment into which Schultz steps. Starbucks is generally performing well. Its sales more than recovered from the pandemic under former CEO Kevin Johnson as the company focused more on mobile orders and drive-thru service.
But Starbucks also faces a growing push to unionize individual stores. Dozens of stores are planning union votes and at least 10 have approved a union, including the New York City Starbucks roastery last week.
Starbucks’ response to the union has been criticized, and on Monday labor activists backing the unionization campaign called for a Congressional investigation into the firings of local Starbucks union organizers.
In his letter, Schultz promised to work with the company “to design our next Starbucks—an evolution of our company deep with purpose, where we each have agency and where we work together to create a positive impact in the world.”
Schultz said his first task “is to spend lots of time with partners. To lift up voices. To see everything that is already in play to help us become this kind of company.” Schultz said he and company leaders would travel to stores and manufacturing plants around the world to talk with employees.
He said the goal is to create a “first-of-a kind, for-purpose company in which the value we create … comes become our company is designed to share success with each of us and for the collective success of all our stakeholders.”
Schultz said Starbucks would then work on “design sessions” with employees across all levels of the organization “to co-create a future of mutual thriving in a multi-stakeholder era.”
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