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April 4 (UPI) — Starbucks is suspending its share buyback plan, returning CEO Howard Schultz said Monday.
In an open letter to employees, Schultz said the “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.”
“In the weeks ahead, I will be traveling, along with our leaders, to connect with partners in our stores and manufacturing plants around the world to understand your thinking and ideas about how to build this next Starbucks,” wrote Schultz, who served two previous terms as the company’s chief executive.
The company announced in March that it reinstated its stock buyback program, with plans to return $20 billion to shareholders over the next three fiscal years. Buybacks increase earnings per share by reducing the number of shares on the market.
The move to suspend the buyback plan coincides with an increased push to unionize at several of the company’s stores.
Before the unanimous vote at a Seattle store in late March, five stores in the Buffalo, N.Y., area and another one in Mesa, Ariz., voted to be represented by the Starbucks Workers Union.
The share buyback plan was instituted under previous CEO Kevin Johnson, who announced his retirement in March, paving the way for Schultz to serve in the role for a third time until a permanent replacement is found. Monday marked his first day back on the job.
“As I make this transition, we are very fortunate to have a founder who is able to step in on an interim basis, giving the board time to further explore potential candidates and make the right long-term succession decision for the company,” Johnson said at the time.
Schultz wasted no time in getting to work, making the announcement to end the share buyback program as the company looks to adapt to a COVID-19 world. It had already announced the intended closure of around 150 stores just prior to the COVID-19 outbreak, in an effort to streamline operations.
“Our company, like many companies, is facing new realities in a changed world. Pinched supply chains, the decimation caused by COVID, heightened tensions and political unrest, a racial reckoning and a rising generation which seeks a new accountability for business,” Schultz wrote on Monday.
“As Starbucks, we can either choose to rise to this moment — or stand idle. I am returning to the company to work with all of you to design that next Starbucks — an evolution of our company deep with purpose, where we each have agency and where we work together to create a positive impact in the world.”
