Starbucks’s CEO Howard Schultz announced on Monday the global coffee chain is suspending its share buyback programme, his first act upon returning to helm a company increasingly faced with efforts by its workers to unionise.
The coffee giant has struggled of late to manage rising costs, facing a tight labour market and supply chain problems in an ongoing global pandemic. It is also confronting a growing wave of unionisation campaigns that has spread to more than 100 stores across the United States, after two upstate New York cafes voted to form a union in December.
Schultz, returning to head Starbucks as an interim CEO after Kevin Johnson announced his retirement last month, said on Monday his first “essential” step is to pause a share buyback programme. “Starting immediately, we are suspending our share repurchasing programme,” the 68-year-old billionaire said in a message. “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.”
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- Howard Schultz
Schultz’s announcement comes just two weeks after Starbucks had said it planned to reinstate the stock repurchase programme over the next three fiscal years, in the hopes it would return $20 billion to its shareholders.
Buyback programmes are popular for investors because they lower the number of outstanding shares, thus increasing each share’s earnings. But the March 16 announcement on the share repurchase programme came as the company is undergoing scrutiny for its response to a growing union movement.
It drew a response from Vermont senator Bernie Sanders, who called the company out for its “egregious anti-union efforts.” “If Starbucks can afford to spend $20 billion on stock buybacks and dividends and provide a $20 million compensation package to its CEO, it can afford a unionised workforce that can collectively bargain for better wages, better benefits, safer working conditions and reliable schedules,” Sanders said in a missive days after the March 16 announcement.
Starbucks has largely 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.
In December, two Starbucks stores in Buffalo, New York became the first in the United States to vote to unionise, and workers at more than 50 stores are now trying to do the same.
The coffee chain has stressed it is not against organised labour, but argued that the issues raised by workers do not justify a union.
Schultz is widely credited for growing the small Seattle coffee chain into a global juggernaut in his two previous stints as CEO. He is expected to stay on until Starbucks names a new CEO in the autumn.