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Starbucks announces ‘renewable’ strategy at investor day on Tuesday

Starbucks CEO Howard Schultz in New York City.

Steven Ferdman | beautiful pictures

Starbucks is expected to unveil a reinvention plan on Tuesday as the coffee giant grapples with changing consumer behavior, outdated store design and a union push in the US.

The strategy is the brainchild of Interim CEO Howard Schultz, who returned to the top job the spring after Kevin Johnson retired. Schultz will give in to upcoming CEO Laxman Narasimhan in April but will stick around to help execute the plan.

Starbucks said investor Tuesday in Seattle will feature presentations and a Q&A session with management, but it’s unclear if Narasimhan will speak to investors for the first time.

Schultz’s new strategy addresses how the coffee chain plans to drive growth in the post-pandemic world. As of now, the company’s stock is down 24% year-over-year, dragging its market value down to $102 billion. A slow recovery in China, a coalition boost in the US and broader economic uncertainty have weighed on stocks, but Wall Street’s approval of a renewable plan could give stocks a resurgence. .

In August, Schultz told investors the plan would address “increasing efficiency” at coffee shops in the US, with consumer behavior changing in the wake of the pandemic. More and more customers are ordering coffee from their phones or driving through the lanes instead of sitting in the cafe. Three-quarters of beverage orders in the most recent quarter were cold drinks, often expensive complementary drinks.

But the company is also looking to appease bartenders who have complained about staff shortages and feel overworked. More than 230 company-owned cafes in the US voted in favor of unionization under Workers. The company, led by Schultz, has been working to limit union support through efforts such as refusing to give higher wages to union cafes and layoffs organizers.

The alliance’s push has slowed in recent months, but Starbucks is still struggling with high sales. A quarter of bartenders in the US will be out of work within 90 days, up from about 10% before the pandemic. according to The Wall Street Journal.

Additionally, Wall Street is expecting an update on Tuesday on the company’s long-term outlook. In May, Starbucks suspended its fiscal 2022 forecast, citing the lockdown in China, investment in American employees and high inflation.

The company’s previous long-term forecast forecast adjusted earnings per share growth of 10% to 12%, revenue growth of 8% to 10%, and global same-store sales growth. from 4% to 5%. Barclays analyst Jeffrey Bernstein wrote in a note to clients that he believes most investors would prefer the company modestly lower its outlook so that it can consistently beat expectations and raise the bar. forecast.

In the most recent quarter, Starbucks reported Global same-store sales grew 3%, driven by strong demand in the domestic market. But Covid-19 restrictions in China have impacted same-store sales growth in the second-largest market.

Investor Tuesday is scheduled to begin at 10:30 a.m. and end at 6 p.m. ET.

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