Starbucks Suspends Stock Repurchasing

Issue 117

Starbucks has suspended the repurchasing of stocks as the company’s CEO Kevin Johnson has decided to step down and allow for the position to be taken by Starbucks’ old CEO Howard Schultz.

Mr. Schultz has stated that the suspension of repurchasing stocks will allow the company to move forward with its next phase of expansion and allow the company to open thousands of new coffee shops around the world. This will offer greater investment for the company and its employees. Mr. Schultz looks to reinvigorate the company after the Covid-19 pandemic and rising costs have negatively impacted the service industry around the globe.

Since the company initially decided to buy back shares Starbucks has repurchased 31.1 million shares with another 17.8 million still available for purchase. The company also authorized an additional $20 million for the continual buyback in October.

Critics of Starbucks’ initial plan for stock buyback stated that the money used for the repurchasing of stocks could be better used to increase employee benefits and for a company that has been so focused on worker's rights this was uncharacteristic.

Several companies have been looking into repurchasing as companies have been able to stockpile cash throughout the pandemic. The repurchasing of stocks can boost per-share profit as well as increase investor sentiment, however, since Starbucks' decision to suspend the repurchasing of its stock the price has fallen by 5.4% down to $86.55 per share.

Source: Wall Street Journal