Howard Schultz, Former Starbucks CEO, Advises
On Company Earnings Shock: "Successor Executives Must Reflect"
"Executives Should Spend More Time With Frontline Employees"
Howard Schultz, the former CEO of Starbucks who built the 'coffee empire,' has urged Starbucks management, which recorded an earnings shock, to improve stores and customer experience.
On the 5th (local time), Schultz posted on the business networking site LinkedIn, saying, "Unfortunately, Starbucks greatly disappointed shareholders' expectations in last week's earnings announcement," and advised, "It is time to refocus on stores and the core."
Starbucks recently recorded an earnings shock. Starbucks' first-quarter revenue ($8.563 billion) fell significantly short of market expectations ($9.13 billion), marking the first negative growth since 2020. Earnings per share ($0.68) also decreased by 8.11% compared to the same period last year. After the earnings announcement, Starbucks' stock price dropped nearly 17% intraday.
Former CEO Schultz explained, "One of the main reasons the company has fallen is poor performance in the U.S. operations," adding, "The answer lies not in data but in the stores, so each store must obsessively focus on the customer experience." He cited specific customer experience improvements such as revamping the mobile ordering and payment platform and developing differentiated premium products.
He also delivered a stern message to the succeeding management. Schultz said, "A company that has experienced a serious failure must reflect and have renewed focus and discipline on the core," and pointed out, "Acknowledge shortcomings without any excuses." He continued, "Leaders must show both humility and confidence while working to restore trust and improve performance across the organization," advising, "Senior executives, including board members, should spend more time with employees wearing green aprons."
Schultz also spoke about Starbucks' market development in China. He said, "I firmly believe Starbucks' China business will soon recover, but it is not progressing as planned," and evaluated, "It is time to reorganize the market entry strategy through coffee-centered innovation and strengthen the company's premium status." Louisa Coffee in China, which has been aggressively competing with low prices by selling coffee at one-third the price of Starbucks locally, surpassed Starbucks' annual sales for the first time last year.
Before stepping down from the front line of management last year, Schultz exerted powerful influence over the company for 35 years, growing Starbucks from a small chain into a coffee empire. Especially during his early tenure, the number of Starbucks stores, which was only 11, increased to about 28,000 across 77 countries. Starbucks responded in a statement, saying, "We always highly value Schultz's perspective," and "The challenges and opportunities he emphasizes are also what we are focusing on, and like his belief, we are confident in Starbucks' long-term success."
Meanwhile, on the 6th, Starbucks' stock price on the New York Stock Exchange closed at $72.90, down 0.29% from the previous session. It has fallen 24% so far this year.
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