Starbucks CEO steps down
Starbucks shares fell roughly three percent in premarket trading percent following the announcement of the resignation of its CEO, Howard Schultz, on Dec 1. Schultz, who has worked for Starbucks as CEO over the last eight years and also served in the position between 1987 and 2000, will now shift his focus in the company to retail innovation. He will be replaced by Starbucks COO Kevin Johnson in April. The announcement comes in the midst of Starbucks’ eight-year growth streak and has raised concerns among the company’s shareholders.
In a recent news release, Schultz assured Starbucks shareholders of the company’s future viability and expressed confidence in its future CEO’s ability to lead.
Schultz stated, “As I focus on Starbucks’ next wave of retail innovation, I am delighted that Kevin Johnson—our current president, COO, a seven-year board member and my partner is running every facet of Starbucks business over the last two years—has agreed to assume the duties of Starbucks chief executive officer. This move ideally positions Starbucks to continue profitably growing our core business around the world into the future.”
Johnson has served on Starbucks’ board for seven years since 2009 and functioned as Starbucks’ COO for two years prior to his current promotion to CEO, according to his biography on the company website. Before joining Starbucks, Johnson proved his leadership abilities in various roles that included working as a Microsoft executive and as the CEO of Juniper Networks.
According to an article published by CNBC, executive analysts further acknowledged that previous years at Starbucks, especially those following the economic recession in 2008, required more innovative leadership. Moving forward, Starbucks may do well with Johnson’s steady approach.
That said, doubts expressed by shareholders about Starbucks’ continued profitability without Schultz in the executive position are understandable given that Starbucks has flourished under Schultz’s leadership as CEO. According to an article published by Motley Fool, since Schultz’s return to Starbucks as CEO on Jan. 8, 2008, Starbucks’ stocks have totaled returns at a rate of 587 percent. Starbuck’s overall market capitalization has increased six-fold to its current value of over $83 billion.
Throughout his time working for Starbucks, Schultz has shown a unique ability to generate company value and to navigate social structures—an ability that some speculate may translate into a more political role for Schultz in the future. This was evident not only in Schultz's ability to raise Starbucks’ stock values to the aforementioned numbers, but also in his ability to guide the company through even trickier international ventures. For example, his successful expansion into countries like China, where navigating financial and cultural realities can be difficult for companies that are used to American norms.
Despite Schultz’ resignation, he will continue to work with Starbucks as the company undergoes transfer of executive power. According to reports by several media outlets, Schultz will remain as chairman of the board and will also continue to guide Starbucks in other capacities and areas, such as retail innovation and social impact.
As of now, however, it is unknown how much longer Schultz will stay with the company past his resignation as CEO in April.