After striving for four decades to bring a small coffee shop becomes a worldwide franchise, Howard Schultz, Executive Chairman of Starbucks Corp., announced his resignation from the company by the end of the month.
Schultz was proven to be a successful leader as Starbucks develops from 11 to more than 28.000 stores in 77 countries. His position in Starbucks Corp. will expire in June 26 according to company management and will be replaced by Myron Ullman, former CEO of JCPenney with Mellody Hobson as vice chairman.
Due to Schultz's resignation from Starbucks Corp., investors are concerned about the company's future. Bill Smead, chief executive officer of Smead Capital Management, which owns 346,113 shares of Starbucks, states that Starbucks has the biggest challenge to figure out how to take care of the customer better. He also questioned about how Starbucks delivers the product to people in a way that they are not considering the rising prices of the product.
The shares fell as much as 3.1 percent, which was the biggest fall this year in New York to $55.28 adding to this year’s decline. The stock was down 2.1 percent as of 10:28 AM on Tuesday (6/5). This year, Starbucks has a slow growth, especially in its home market because of its declining performance.
Other events also contributed to Starbucks' declining performance. Starbucks was linked to accusation of racial discrimination because of their liberal attitude through social issues. Afterwards, they closed 8,000 franchises to start anti-bias training program to overcome the accusation. Some shareholders were questioning the decision as it would spend a large cost.
There are some speculation related to his resignation. According to press release, Schultz wants to spend more time with his family and writing a book about Starbucks' social impact work. Another speculation that spreads is related to his participation for presidential election.
In an interview with The New York Times, he agreed that he is considering to take a chance in politics. "I want to be truthful with you without creating more speculative headlines," he said. "For some time now, I have been deeply concerned about our country — the growing division at home and our standing in the world". Schultz states to CNN's Poppy Harlow that he intends to consider about some options, including public service. He also added that his decision for the future is uncertain.
Before his recent resignation, he left Starbucks in 2000 due to exhaustion from growing Starbucks from a regional coffee shop to a global company over a period of 18 years. He returned eight years later because he felt the coffee chain was drifting from its core values, and he was concerned about its declining performance.
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