Starbucks set to detail store investments, new cafe equipment



  • Company convenes investors to outline strategy plan under interim CEO Howard Schultz

Starbucks Corp. is expected to brief investors Tuesday on a strategic revamp ranging from store operations to employee benefits, with shareholders monitoring the plan’s potential cost and workers anticipating improvements at stores.

Interim Chief Executive Howard Schultz and other company executives are slated to discuss Starbucks’s U.S. and international business throughout the day at the company’s Seattle headquarters. They are expected to unveil some of the updates to store operations that executives have plotted since last year at the company’s Tryer Center technology lab.

Laxman Narasimhan, hired earlier this month to succeed Mr. Schultz, is expected to attend the event but not have an extensive speaking role, according to the company. Mr. Narasimhan is joining the company on Oct. 1 as “incoming CEO," according to the company, and is slated to learn Starbucks’s business alongside Mr. Schultz for the first six months. He will become the CEO in April 2023, whereupon Mr. Schultz will shift to a board role.

“This is such a defining moment for the company," Mr. Schultz said during an internal employee meeting last week.

Investors for months have awaited financial details of the company’s strategic plan. Mr. Schultz canceled billions of dollars in stock buybacks soon after returning to the company in April, saying the money would be better spent on store operations and workers. The company suspended fiscal guidance in May, telling investors that executives needed time to assess how much the investments would cost.

Starbucks’s shares have declined 3% since Mr. Schultz took the interim CEO role, while the S&P 500 has fallen roughly 10% and the Dow Jones Industrial Average has dropped around 7% during that time period.

Some Wall Street analysts have projected that the investments will weigh on Starbucks’s profit margins this year, though they said that spending on improved operations will help sales and earnings over the long term.

“There is much more at stake than usual for this year’s event," Wall Street firm Morgan Stanley said in a note to investors.

Starbucks is expected to detail changes to cafe equipment and operations, such as reducing the steps needed to make complicated cold beverages. Baristas have said they are eager to hear about a new blender that is slated to make whipping the chain’s cold foam faster and easier to dispense, which Mr. Schultz previewed at an employee event last spring.

The company is also expected to discuss ways it aims to make working for the chain more appealing. Starbucks has struggled with a labor shortage, as have many restaurants seeking to add back staff in the wake of the pandemic. Starbucks is also facing a union push in its stores.

The National Labor Relations Board said Monday it had certified unions in 224 of Starbucks’s roughly 9,000 U.S. stores, and votes against unionization at 42 locations.

Starbucks has said it would spend $1 billion on additional labor investments this year. The company said Monday that it would offer a direct savings program for U.S. workers, with the company kicking in up to $250 a person who enrolls. The chain said that it wouldn’t automatically extend the benefit to unionized stores, saying such benefits must be negotiated through collective bargaining.

Starbucks Workers United, the union representing U.S. cafe workers, said workers should have had more input into the company’s strategic plan. Members planned to hold a rally outside of the company’s headquarters Tuesday.

Starbucks said last month that it will update its earnings guidance for its next fiscal year during the event, and outline some longer-term financial expectations. Analysts polled by FactSet currently expect adjusted earnings per share of $3.37 and sales of $35.4 billion for the company’s 2023 fiscal year.

This story has been published from a wire agency feed without modifications to the text

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