The Board of Directors of Starbucks Coffee Company (NASDAQ:SBUX) yesterday announced a series of initiatives aimed at driving shareholder value by refocusing the company on providing customers with the distinctive Starbucks Experience and building on Starbucks legacy of innovation. To accomplish this objective, the board has appointed Howard Schultz, chairman, to take on the additional role of CEO, effective immediately, replacing Jim Donald, who is leaving the company.
“Howard is the architect of the Starbucks brand and the visionary behind the unique customer experience that is at the heart of this remarkable company’s success,” says Craig Weatherup, chairman of the Starbucks Board’s Nominating and Corporate Governance Committee. “Given what the Board believes needs to be done, there is no better person to drive change and ensure that Starbucks is positioned to innovate, execute and relentlessly focus the entire organization on the customer.”
Schultz served as CEO of the company from 1987 to 2000. During that period, the company went public in 1992 and enjoyed exceptional U.S. and international growth. From 2000 onward, in his role as chairman, Schultz focused on the company’s global strategies and expansion, which now includes a significant and growing presence in 43 countries. As chairman and CEO, he will be responsible for the overall strategic direction of the company, with a predominant focus on everything that touches the customer. Martin Coles, COO, will work closely with Schultz and have oversight responsibility for all operational aspects of the business.
“I am enthusiastic about returning to the role of chief executive officer for the long term and excited to lead Starbucks and its dedicated partners (employees) to even greater heights of achievement on a global basis,” Schultz says. “We must address the challenges we face and we know what has to be done. Put simply, we are recommitting ourselves to what has made Starbucks and the Starbucks Experience so unique: ethically sourcing and roasting the highest quality coffee in the world; the relentless focus on the customer; the trust we have built with our people, and the entrepreneurial risk-taking, innovation and creativity that are the hallmarks of our success.”
Schultz stated that his agenda will include:
* improving the current state of the U.S. business by refocusing
on the customer experience in the stores, new products and
store design elements, and new training and tools for the
Company’s store partners to help them give customers a
* slowing the Company’s pace of U.S. store openings and closing
a number of underperforming U.S. store locations, enabling
Starbucks to renew its focus on its store-level unit
* re-igniting the emotional attachment with customers and
restoring the connections customers have with Starbucks
coffee, brand, people and stores;
* re-aligning Starbucks organization and streamlining the
management to better support customer-focused initiatives and
reallocating resources to key value drivers; and
* accelerating expansion and increasing the profitability of
Starbucks outside the U.S., including redeploying a portion of
the capital originally earmarked for U.S. store growth to the
“Taken together, these initiatives will help transform Starbucks and drive the company’s enduring success. We know that we can improve our performance by getting back to the essence of what drove Starbucks past success–our passion for the business and a complete focus on the customer and our relationship with our people. In doing so, we will rely on the continued efforts and dedication of our partners all around the world, who have and will continue to contribute so much to the Starbucks success story,” commented Schultz.
Starbucks will provide further details about its updated store growth strategy and other actions during its 2008 first quarter earnings call on January 30, 2008.
Schultz stated that there are no one-shot solutions or overnight fixes, rather success lies in rigorous execution of the objectives he outlined for the company. “The position we hold today in our customers’ and partners’ hearts and souls all around the world is not an entitlement. We must earn the trust of our customers every day – by how we conduct our business, how we treat each other as people and how we act as a responsible corporate citizen. We remain committed to providing health care for all full and part-time partners, executing our best-in-class Corporate Social Responsibility efforts, and encouraging our coffee suppliers to participate in our C.A.F.E. (Coffee and Farmers Equity) practices program in our origin countries.
“On behalf of the Board and all Starbucks partners, I would like to thank Jim Donald for his numerous contributions to our Company. Jim was a passionate and tireless advocate for our brand, and we wish him success in his future endeavors,” concluded Schultz.