The 68-year-old Schultz became Ceo of Starbucks for the third time and also announced the suspension of stock repurchases

The Father of Starbucks is back.

On April 4, local time, 68-year-old Howard Schultz returned to Starbucks (NASDAQ: SBUX), which will temporarily take over as the company's chief executive officer and enter the company's board of directors.

Earlier in the day, Schultz announced the first reform after the handover in an open letter to stakeholders: Starbucks will suspend its stock repurchase program from now on. At a time of supply chain pressure, pandemic impact, rising tensions, and political instability, this will allow companies to invest more in their employees and stores. In the coming weeks, Schultz will travel to stores and factories to discuss with employees how to reinvent Starbucks.

It is reported that in April 2020, Starbucks suspended its share repurchase program due to the impact of the epidemic, and in October 2021, Starbucks promised to repurchase and pay dividends of $20 billion in the next three years.

On April 4, the U.S. stock market closed, And Starbucks fell 3.7%. Before U.S. stock marketing on April 5, Starbucks fell more than 1.5%. Starbucks shares have fallen about 25 percent this year, and the Wall Street Journal notes that a legitimate criticism of stock buybacks is that companies tend to be bad at seizing market moments — cutting buyback programs when stocks are frustrated and increasing buybacks when stocks are rising. Schultz seems to have the same misjudgment.

Starbucks CEO Howard Schultz

Salary of $1, participating in the selection of the next CEO

Kevin Johnson, who has been at the helm of Starbucks for more than 5 years, "handed over" Schultz.

Earlier, on March 16, Johnson said that after his retirement, he would continue to serve as a special adviser to Starbucks partners (employees) and the company and the board of directors until September this year. Johnson, who has a background in Microsoft and Juniper Networks, led Starbucks to expand its digital operations and take Starbucks stock prices to a new level during his tenure.

At that time, Starbucks said that it had not yet confirmed a successor to the CEO, which was expected to be finalized before the fall. During this time, Schultz, the father of Starbucks who ran the company for many years, will return briefly as the interim CEO of Starbucks, paying $1.

According to Starbucks, the board has set up a working committee to oversee the CEO selection process, which is "ongoing and is generating a strong list of candidates." Starbucks said that in addition to the day-to-day management of the company, Schultz will also participate in the CEO selection process and help the transition of the next CEO.

Over the past four decades, Schultz has led Starbucks from 11 stores to a global coffee chain, opening more than 28,000 stores in 77 countries.

Third time CEO, reinventing Starbucks

Schultz joined Starbucks in 1982 and after a brief absence from Starbucks, he first served as Starbucks CEO in 1987.

In his book "Starting from scratch," Schultz revealed that in 1987, Starbucks, which had only 6 stores at the time, was having financial problems, and the founders approached him in the hope that he would buy Starbucks. Eventually, with the help of Bill Gates Sr., the father of the world's richest man Bill Gates, Schultz bought Starbucks for $3.8 million. Schultz stepped down as CEO in 2000 to serve as the company's Global Chief Strategist and Chairman, focusing on international markets.

In 2008, Starbucks expanded too much, and at the same time fell into food safety disputes and faced a financial crisis. In the case of "belly and back", Schultz returned for the second time, leading Starbucks to change and transform. In the decade that followed, the number of Starbucks stores increased from 15,000 to nearly 30,000.

Today, Starbucks is at a point of internal and external difficulties. The impact of the epidemic, supply chain turmoil, high costs and other extremely challenging external environments, the recent leading position in the Chinese market has also been challenged by emerging coffee companies... Schultz returned to Starbucks for the third time, and he also said in an open letter that he would re-outline starbucks with all stakeholders.

Since 2021, the impact of the epidemic and cost pressures are constantly squeezing the profit margins of retail catering companies such as Starbucks. In its first quarter of fiscal 2022 results, Starbucks noted that its sales in North America and international regions ( primarily China ) were affected due to the rapid spread of the pandemic. Rachel Ruggeri, Starbucks' chief financial officer, said on the conference call that factors such as inflation, the impact of the pandemic and labor costs "will put incremental margin pressures of more than 200 basis points."

Affected by the dry weather, the production of coffee beans in the main planting areas has dropped sharply, and the price of Arabica coffee beans has soared under the influence of factors such as imports and transportation costs. Previously, the Starbucks U.S. market rose in October 2021 and January this year, respectively, and in February this year, Starbucks China also implemented the first price increase since 2018.

From the perspective of Schultz and Johnson in the past, Starbucks attaches great importance to the Chinese market. Schultz publicly stated in 2017 that in the coming years, the company would continue to grow in China at the rate of opening a new store every 15 hours.

Previously, his successor, Johnson, also continued Schultz's expansionist thinking in the Chinese market. On the first quarter of fiscal 2022 results call, Johnson noted that new stores in China have achieved best-in-class store profitability and return on investment. As of the first quarter of fiscal 2022, Starbucks had more than 5,500 stores in Chinese mainland, which also brought the company's global store count to a record 34,317. Johnson said that as long as the new stores continue to perform well, Starbucks will continue to rely on opening new stores to make a long-term layout of the Chinese market.