Starbucks' Star Is Back

• Email
• Share
• Print

When I recently nominated Starbucks (Nasdaq: SBUX) as The Best Stock for 2008, I certainly didn't see this development coming.

Chairman and Starbucks luminary Howard Schultz has decided to resume his role as chief executive officer, a position he hasn't held in seven years. This is an extra shot of caffeinated good news for Starbucks shareholders and potential investors, even if it isn't a magic bullet that will fix everything overnight.

Schultz's return echoes the footsteps of many other leaders and founders who stepped away from and then returned to their CEO duties when the firms ran afoul, among them Apple's (Nasdaq: AAPL) Steve Jobs, Dell's (Nasdaq: DELL) Michael Dell, and Yahoo!'s (Nasdaq: YHOO) Jerry Yang. All of these names serve as great arguments for having passionate founders in direct leadership roles.

This new development suggests that Starbucks may not have much to fear from McDonald's (NYSE: MCD) and its plans to install coffee bars. In fact, Schultz's return very well may be a little scary for McDonald's. After all, Schultz is the person most aware of Starbucks' soul -- or, if you recall, its possible lack thereof.

Upcoming plans for Starbucks include slowing the pace of domestic growth, closing some underperforming stores, and redeploying part of the capital dedicated to U.S. store openings to the all-important international expansion.

Word has it that Schultz also plans to focus on store-level unit economics and refocus on the strong relationship between Starbucks and its customers. That relationship has always been a large part of "the Starbucks experience."

I'm aware of the risks that Starbucks faces, but the negativity toward the coffee specialist has gotten out of hand lately. After all, this is a company with a renowned brand name, and even with some slowing trends, it hasn't added up to a stinker of a company by any stretch. Schultz's return to a hands-on role gives me even more reason to feel optimistic about Starbucks' health in 2008 and beyond. Welcome back, Howard.