June 4, 2018 / 10:54 PM / a year ago

Breakingviews - Starbucks boss seeks smoother second shot at exit

Starbucks Chairman and CEO Howard Schultz delivers remarks at the Starbucks 2016 Investor Day in Manhattan, New York, U.S. December 7, 2016. REUTERS/Andrew Kelly

NEW YORK (Reuters Breakingviews) - Howard Schultz is finally quitting Starbucks, the company he built into an iconic $80 billion global coffee brand. He’s turning in his corporate email address and planning new ventures – maybe even running for U.S. president. But he stepped away once before and had to return. If he’s to leave Starbucks for good this time, the coffee chain will need ideas that stay fresher for longer.

Though he owns less than 3 percent of the company that went public in 1992, Schultz is unquestionably its architect – and the shares have delivered a roughly 200-fold total return since then, outdoing Apple. After a stint as executive chairman with Kevin Johnson as chief executive, he’s now leaving Johnson in charge. Schultz is stepping down from the board altogether, though he’ll be called chairman emeritus.

He’s famously liberal, and he and Johnson swung rapidly into action after the arrest of two black men at a Philadelphia shop in April, closing 8,000 stores for an afternoon of racial-bias training just last week. Since he moved from CEO to executive chairman over a year ago, he has encouraged politicians to “speak their conscience.” He said on Monday that he’s considering options including “public service.” Among corporate bigwigs, few have a better pedigree for seeking the Democratic presidential nomination in 2020.

Back in 2000, he made a first attempt at stepping down. Things went fine for Starbucks for a while, but over-expansion and other problems led to the ouster of the then-boss and the return of Schultz in 2008. With a concern for customers and, especially, employees that goes far beyond lip service – including health insurance for part-time workers - he succeeded in brewing a turnaround, and it’s that touch that some investors may feel nervous about losing.

Starbucks’ share performance has also been lukewarm at best of late. Yet there are bright spots, like the potential for accelerating growth in China noted by analysts at Jefferies. Whatever Schultz does next he may not be around to save the day again, even if he’s wanted. He’ll be hoping his second shot at an exit ends up smoother than the first.


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