☕ Starbucks at a crossroads: new management, restructuring and questions about the future!
Starbucks $SBUX is at a pivotal stage of transformation. After CEO Brian Niccol took over, significant changes, layoffs and a "Back to Starbucks" plan are coming .
Key changes in top management
Chief Financial Officer Rachel Ruggeri is leaving after 20 years, and her successor will be Cathy Smith, formerly CFO of Nordstrom, Target a Walmart International.
The company has left Sara Trilling (President, North America) and Arthur Valdez (Director of Delivery and Customer Solutions).
The following have joined the management team Mike Grams (Director of Stores) and Meredith Sandland (Director of Store Development) - both with backgrounds in Taco Bell.
She was also newly appointed Tressie Lieberman as global brand director.
📉 Restructuring and layoffs
Starbucks to lay off 1,100 employees in an effort to streamline structure and eliminate "unnecessary layers of management." Executives in North America will be required to attend the office at least 3 days a week. The new policy will also apply to future hires.
📊 Numbers to watch
Revenue was flat at $9.4 billion, slightly above estimates ($9.32 billion).
Earnings per share fell 23% to $0.69, but beat estimates ($0.66).
Global same-store sales were down 4%, same-store traffic down 6%.
In the US, footfall fell 8% but average spend rose 4%.
💡 What does the "Back to Starbucks" plan mean?
Niccol is betting on a return to its roots - a focus on core coffee products, optimized pricing and faster service. The company is investing heavily in change, but this is putting pressure on margins and profitability in the short term.
Starbucks is facing its fourth straight quarter of declining traffic, and that's an unpleasant signal.
Investing in restructuring may be beneficial in the long run, but it weighs on results in the short term.
Layoffs and management changes suggest a major reorganization. Success will depend on the speed and effectiveness of these changes.
How do you see the future of this company? Can Brian Niccol revive the growth of Starbucks?
The growth this year is quite nice, but I've never been very interested in this company and I won't be buying shares.
I've had shares of $SBUX in my portfolio for a long time, and I overbought last year. This new plan looks interesting and hopefully the company should do well again.