The first chapter of Starbucks and Howard Schultz’s story is legendary. Schultz became CEO of Starbucks in 1982 with four branches in the Seattle area. In less than two decades, Starbucks had a presence on all continents, with 3,501 total stores and $2 billion in revenue.
He left Starbucks in 2000 due to exhaustion from growing Starbucks from a regional coffee chain to a global company over a period of 18 years. He returned eight years later because he felt the coffee chain was drifting from its core values, and he was concerned about its slumping performance.
Schultz’s Return
When Schultz came back to Starbucks in 2008, the company’s fortunes were flagging. Its stock price had been flat over the past eight years, and competitors were eating away at sales and margins from the lower end and the top end.
Revenue was growing across the board, but it was not keeping up with new store creation. Basically, Starbucks was dependent on opening new stores for growth while same-store sales were declining. Schultz believed this was a critical moment for the company to go back to its core values and make necessary changes to reverse these trends and preserve the integrity of the brand.
He fired nearly all executives, shut down lagging stores and chartered a new course for the company to ensure that operations would not be sacrificed for growth. Wall Street has been enthusiastic toward Schultz’s return and changes, as the stock has climbed more than fivefold between his return as CEO and March 2015. Schultz’s original tenure as CEO also coincided with a more than tenfold rise in the stock price between its IPO in 1992 and his resignation in 2000.
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Leaving the Second Time
In a press release posted on June 4, 2018, Starbucks announced that Schultz will step down from his position. Schultz has been honored with the position of chairman emeritus, effective June 26, 2018. Myron E. Ullman has been appointed as the next chair of the Board of directors, and Mellody Hobson has been appointed vice chair.
Schultz intends to spend more time with his family and work on a book focused on Starbucks’ social impact work, according to the press release.
However, his departure from the company has sparked curiosity over his future plans. Responding directly to suspicions of a U.S. presidential run, Schultz said in a New York Times article, “I intend to think about a range of options, and that could include public service. But I’m a long way from making any decisions about the future.”
Reuters reported on July 9, 2018 that Schultz addressed investor concerns that Starbucks is under pressure in China’s fast-growing market, saying that the recent slowdown in China is temporary. He also hinted at potential collaboration with e-commerce giant Alibaba Group Holding Ltd’s (BABA) billionaire founder Jack Ma. Such a partnership could help bolster the company’s online coffee sales in China.
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