Starbucks is doing better than ever after Howard Schultz

This year has been filled with transition and turmoil at Starbucks. But don't tell that to Wall Street....

Posted: Nov 30, 2018 7:06 PM
Updated: Nov 30, 2018 7:06 PM

This year has been filled with transition and turmoil at Starbucks. But don't tell that to Wall Street.

Despite negative publicity in 2018 that stemmed from the arrests of two black customers in a Philadelphia store in April, worries about more competition from Dunkin' and McDonald's and the retirement of its iconic leader Howard Schultz, shares of Starbucks are up more than 15% this year and are not far from an all-time high.

Business figures

Companies

Howard Schultz

Starbucks Corp

Beverages

Business and industry sectors

Business executives

Business, economy and trade

Coffee

Consumer products

Food and drink

Kevin Johnson

Kinds of foods and beverages

Labor and employment

Workers and professionals

Starbucks (SBUX) CEO Kevin Johnson has had to make some tough decisions that appear to be paying off.

Johnson was widely praised for how Starbucks handled the aftermath of the Philadelphia incident. He personally apologized and vowed to do better. Starbucks ultimately decided to close more than 8,000 stores for a few hours in late May for racial bias training.

In late June, shortly after Schultz said he would step down as executive chairman, Starbucks announced it would shutter 150 underperforming US stores this year -- triple the usual amount of annual closures.

Johnson had to make some bold moves quickly

Shares of Starbucks fell more than 9% on that news -- and the stock continued to slide. It hit a 52-week low in late June.

That brought back painful memories of when Schultz last took a break from Starbucks. He stepped down as CEO in 2000 but wound up coming back as CEO in 2008 after sales started to slump and the stock tanked.

Schultz eventually helped lead a big comeback for Starbucks with aggressive moves into China and other overseas markets.

That set the stage for Schultz to eventually step aside again as CEO. In 2015, Starbucks hired Johnson, the former CEO of Juniper Networks (JNPR) and a veteran of Microsoft (MSFT) and IBM (IBM).

Johnson took over as CEO in April 2017, but it wasn't until Schultz decided to step down as executive chairman this year that Johnson truly had the spotlight to himself. And he was quickly thrust into crisis mode.

But Johnson was vindicated after Starbucks reported earnings and revenue that topped forecasts for both the third and fourth quarter in July and November.

Sales in the company's two biggest markets -- the United States and China -- are rebounding. The company's bet on mobile ordering and payments have been a hit, too. Mobile now accounts for nearly 15% of all transactions in US stores.

A new global licensing deal with Nestle to make and sell Starbucks-branded coffees and teas has been praised by analysts. Starbucks also continues to expand internationally. It finally opened its first location in Italy in September.

Even activist investor Bill Ackman seems pleased. His fund recently bought a $900 million stake in Starbucks but is not pushing for any major changes, saying he's pleased with the actions Johnson has taken.

So it seems that Starbucks is in good hands with Johnson.

It helps that he also has a pretty potent management team behind him, most notably Rosalind Brewer, the former CEO of Walmart's (WMT) Sam's Club division. She joined as COO of Starbucks in September 2017.

As for more competition from Dunkin' Brands (DNKN) and McDonald's (MCD), it seems that a proverbial rising tide is lifting all boats.

With the US economy in solid shape, unemployment at a nearly 50-year low and wages rising, consumers seem willing to spend at multiple places for their coffee.

That means Starbucks can thrive even as its competitors are also doing well.

New York Coronavirus Cases

County data is updated nightly.

Cases: 2362682

Reported Deaths: 54846
CountyCasesDeaths
Kings31550210709
Queens30350010134
Suffolk2253653502
Nassau2050193243
Bronx2006696685
New York1599194598
Westchester1400252327
Erie980631875
Richmond849681901
Monroe771961151
Orange54045887
Rockland50441767
Onondaga45101704
Dutchess33437483
Albany28073368
Oneida25360538
Niagara21881382
Broome21369381
Saratoga18186185
Ulster16145270
Schenectady15071214
Rensselaer13084154
Putnam1170595
Chautauqua10622154
Oswego9402100
Chemung8837142
St. Lawrence8646115
Ontario840595
Steuben8179155
Cayuga7760100
Sullivan771780
Jefferson728571
Wayne680477
Cattaraugus662296
Genesee5959126
Herkimer5905115
Tompkins579559
Clinton546434
Madison530296
Fulton520497
Livingston510264
Montgomery4978133
Cortland472769
Warren460276
Columbia4558107
Tioga434466
Chenango411285
Otsego411050
Allegany394692
Greene387682
Wyoming386854
Washington383761
Orleans356683
Franklin337615
Lewis312336
Delaware299040
Seneca242258
Schoharie204120
Essex191429
Yates137126
Schuyler125316
Hamilton4043
Unassigned13031
Out of NY0285
Utica
Mostly Cloudy
71° wxIcon
Hi: 75° Lo: 63°
Feels Like: 71°
Oneonta
Mostly Cloudy
74° wxIcon
Hi: 76° Lo: 62°
Feels Like: 74°
Herkimer
Mostly Cloudy
71° wxIcon
Hi: 78° Lo: 62°
Feels Like: 71°
Old Forge
Cloudy
71° wxIcon
Hi: 69° Lo: 62°
Feels Like: 71°
WKTV Radar
WKTV Temperatures
WKTV Severe Weather
NEW Game Day Deals each week
Follow the 2021 Go the Distance Team - sponsored by Gilroy Kernan & Gilroy
Chapter Photofacial Therapy Giveaway
Looking for work or looking to hire? Check out the WKTV Job Fair!
Saluting Those Who Are Proud 2 Serve